Understanding Capital Gains Tax is crucial if you’re planning to sell a property in Bangalore.
It’s one of those things that most sellers don’t think about until the last minute—and then it suddenly becomes a big deal.
Whether you’re selling an apartment, a villa, or a plot of land, knowing how capital gains tax works can help you plan better and avoid surprises.
Let’s break it down in simple terms, shall we?
Understanding Capital Gains Tax
So, What Exactly Is Capital Gains Tax?
Whenever you sell a capital asset like real estate, and the selling price is more than what you paid to buy it, the profit you earn is called a Capital Gain.
And yes, the government wants a piece of that profit.
That’s where Capital Gains Tax (CGT) comes in.
There are two types:
- Short-Term Capital Gains (STCG): If you sell your property within 2 years of purchase.
- Long-Term Capital Gains (LTCG): If you sell your property after 2 years.
Both are taxed differently. Let’s get into the details.
1. Short-Term Capital Gains (STCG)
If you sell your property within 24 months of owning it, the gain is considered short-term, and it’s added to your total income. This amount is then taxed as per your applicable income tax slab.
So, if you fall in the 30% tax bracket, your short-term gain gets taxed at 30%.
Ouch! Right?
2. Long-Term Capital Gains (LTCG)
Now, here’s where it gets a bit more manageable.
If you sell the property after 2 years, your profit qualifies as a long-term capital gain.
The best part? LTCG is taxed at 20% with indexation benefits.
Indexation helps adjust the purchase price for inflation, which lowers your tax liability.
You basically get a tax break for holding on to the property longer.
Example to Make It Real
Let’s say you bought a flat in Bangalore in 2015 for ₹50 lakhs and sold it in 2024 for ₹1.2 crore.
That’s a ₹70 lakh profit on paper.
But with indexation, your purchase price might be adjusted to, say, ₹75 lakhs, reducing your taxable gain to ₹45 lakhs.
Now, you pay 20% tax on ₹45 lakhs instead of ₹70 lakhs. That’s a huge saving, right?
How to Save on Capital Gains Tax
Yes, there are legal ways to save on CGT when selling property in Bangalore.
Let’s go through a few smart strategies:
a) Invest in Another Property (Section 54)
If you use the gains to buy another residential property within 1 year before or 2 years after the sale (or construct one within 3 years), you can claim complete exemption on LTCG under Section 54.
b) Invest in Capital Gains Bonds (Section 54EC)
You can also invest up to ₹50 lakhs in specified bonds (like REC or NHAI) within 6 months of the sale.
The investment is locked for 5 years, but your capital gains become tax-free.
c) Capital Gains Account Scheme (CGAS)
Not ready to invest right away?
Park the money in a CGAS account before filing your returns. This keeps your exemption claim intact while giving you time to decide.
Documents You’ll Need
When dealing with capital gains tax, ensure you maintain:
- Sale deed and purchase deed
- Proof of expenses (like brokerage, stamp duty, registration charges)
- Indexation chart
- Investment proofs, if claiming exemptions
Being organized helps you stay compliant—and lets you sleep better at night.
Important Note
If you’re a Non-Resident Indian (NRI), tax is deducted at source (TDS) when you sell a property in India.
But even then, understanding capital gains tax can help you plan and reduce your tax liability through exemptions.
Don’t Let Taxes Eat Into Your Profits
Selling property is a big financial move, and capital gains tax can take a significant chunk out of your earnings if you’re not prepared.
But the good news is—with the right planning, you can minimize or even eliminate that tax burden.
And hey, that’s where Proptals steps in.
We not only help you sell your property in Bangalore at the best price, but we also guide you through the paperwork, taxes, and legal formalities—including capital gains planning.
Whether it’s connecting you with expert CAs or helping you reinvest wisely, we’ve got your back.
👉 Looking to sell your property and need help understanding capital gains tax?
Get in touch with Proptals today for a free consultation!