When dealing with real estate transactions, understanding the income tax consequences is crucial for both buyers and sellers. Here's a comprehensive guide to help you stay compliant and make informed decisions:

For Sellers: Capital Gains Tax

1. Short-Term Capital Gains (STCG):

   • Applicable if property is sold within 2 years of purchase.

   • Gains are added to your income and taxed as per your slab rate.

2. Long-Term Capital Gains (LTCG):

   • Applies when the property is held for more than 2 years.

   • Taxed at 20% with indexation benefits.

   • Exemptions available under:

     • Section 54: Reinvestment in residential property

     • Section 54EC: Investment in notified bonds

     • Section 54F: Sale of other than residential property and reinvestment

For Buyers: TDS and PAN Compliance

1. TDS Deduction:

   • Buyer must deduct 1% TDS on property purchases above ?50 lakhs under Section 194IA.

   • TDS is to be paid via Form 26QB, and Form 16B must be issued to the seller.

2. PAN Requirement:

   • Buyer must ensure seller's PAN is available; else TDS is deducted at 20% instead of 1%.

Joint Ownership & Tax Sharing

• If the property is jointly owned, capital gains or deductions are split based on the share of ownership.

• Each co-owner should report their share correctly while filing tax returns.

Under-Construction Property: GST Applicability

• 5% GST (without Input Tax Credit) applies on under-construction flats.

• No GST is applicable on ready-to-move-in flats with a completion certificate.

Important Tips:

• Always retain sale deed, payment records, and valuation certificates.

• Consider getting a capital gains report from a tax expert before selling.

• File income tax returns correctly to avoid scrutiny under Sections 143(1) or 148.