Any gains from transfer of capital assets attracts capital gains tax. The tax liability depends on the period that the asset was held by the seller. In case of real estate, if it was held for less than 3 years, then gains (sale minus purchase price) from the transfer will be considered short-term capital gains (STCG). It gets added to the seller’s other incomes and is taxed at the applicable slab rate. If the property was held for more than 3 years, then the gains are considered long-term capital gains (LTCG) and taxed at 20% with indexation. Mint Money explains the steps to calculate LTCG arising from transfer of assets.
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