What is the amount of exemption available on capital gains that arise from transfer of house property?
If the amount of capital gain is less than the cost of the new house property, including cost of land, the entire amount of capital gains is exempt from tax. Alternatively, if the amount of capital gains is more than the cost of the new house property, the difference between the amount of capital gains and the cost of the new house is chargeable to tax as capital gains. What is the mode of computation? The computation of capital gains depends upon the nature of capital asset that is transferred, i.e., whether it is a short-term or a long-term capital asset. Capital gain, arising on transfer of a short-term capital asset, is short-term capital gains whereas Capital gain, arising on transfer of a long-term capital asset, is long-term capital gains. As compared to long-term capital gain, the tax incidence is higher in the case of short-term capital gain.
