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Indexation adjusts your purchase price for inflation over the holding period. This significantly reduces the taxable capital gain.

Section 54 provides exemption from long-term capital gains tax if you invest the gains in purchasing or constructing another residential property within specific timelines.

Gold held more than 3 years is long-term and taxed at 20% with indexation. Short-term gold gains are added to income and taxed as per your slab rate.

Section 54GB allows exemption on capital gains from the sale of a residential property if the net consideration is invested in the share capital of an eligible start-up before the earlier of the due date of filing the ITR or 1 year from the sale. The start-up must utilise the funds to acquire new assets within 2 years. The exemption is proportionately withdrawn if the start-up sells the assets within 5 years.

For property inherited or acquired before April 1, 2001, you have the option to use either the actual cost of acquisition or the fair market value as of April 1, 2001, whichever is higher. The fair market value can be determined using the stamp duty valuation or a registered valuer's report. This cost is then indexed using the CII from 2001-02 onwards for the capital gains calculation.

When property is received as a gift from a relative, the cost of acquisition for the recipient is the cost at which the previous owner acquired it (cost to the previous owner). The holding period includes the period for which the previous owner held the property. For gifts from non-relatives, the fair market value on the date of gift may be treated as the cost under Section 56(2)(x) if it exceeds ₹50,000. Indexation benefit starts from the year the previous owner acquired the property.

The stamp duty value (circle rate or ready reckoner rate) is the minimum value set by state governments for property registration. Under Section 50C, if the sale consideration of a property is less than the stamp duty value, the stamp duty value is deemed to be the full value of consideration for capital gains purposes. However, if the stamp duty value exceeds the actual sale consideration by more than 5% (10% from FY 2024-25), the assessee can challenge the valuation before the Assessing Officer.

Yes, you can claim exemption under Section 54 by using the capital gains to construct a house on a plot of land you already own. The construction must be completed within 3 years from the date of sale of the original property. The amount of exemption is limited to the capital gain amount actually utilized for construction. If construction is not completed within 3 years, the unutilized gain must be deposited in the Capital Gains Account Scheme.

Capital gains from inherited property are taxed in the hands of the legal heir. The cost of acquisition for the heir is the cost at which the previous owner acquired the property, and the holding period is counted from the date the previous owner acquired it. This ensures that inherited property is treated as long-term if the original owner held it for the long-term holding period. Indexation benefit is available from the year of the original owner's acquisition.

If a residential property is used partly for business purposes, the capital gain on sale must be apportioned between business use and residential use. The portion attributable to business use may be taxed as business income rather than capital gains. For claiming Section 54 exemption, the exemption applies only to the residential portion of the gain. It is advisable to maintain separate records of the area and period of business usage to substantiate the apportionment.