Selling your house in February? Here's what you need to know about capital gains tax

House Sale

• Pay advance tax on February house sale by 15 March or 31 March with interest
• Invest in capital gains bonds within six months of property sale for exemption
• Investment amount is based on unindexed long-term capital gains

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Today’s Ask Wallet-Wise breaks down the schedule for capital gains tax due on a February house sale, the timeline for investing in capital gains bonds and whether to invest based on indexed or actual gains.

Ask Wallet-Wise initiative offers expert advice on matters related to personal finance and money-related queries. You can email your queries to askwalletwise@nw18.com, and we will try to get a top financial expert to address.

If I sell my house in February, when does the capital gains tax become payable? What is the deadline for investing in capital gains bonds to claim tax exemption? Should the investment be based on the indexed or actual capital gains?

Expert’s Advice: An individual is required to pay advance tax if the net tax payable, after adjusting for tax deducted or collected at source, exceeds Rs 10,000. In such cases, advance tax must be paid as per schedule: 15 percent by June 15, 30 percent by September 15, 30 percent by December 15 and the remaining 25 percent by March 15.

For capital gains, advance tax is payable in the remaining instalments falling after the date of sale of the asset. As the sale is proposed in February, the entire advance tax liability will need to be paid by the last instalment due on March 15, 2026. If this date is missed, the tax can be paid by March 31, though interest for one month will be applicable.

If you are a senior citizen with no income from business or profession, you are not required to pay advance tax even on capital gains. In such cases, the entire tax liability can be paid by the due date for filing the return, without any interest being levied.

If you plan to claim exemption by investing in capital gains bonds of specified financial institutions under Section 54E, the investment must be made within six months from the date of sale of the property, regardless of when the sale proceeds are received.

With indexation largely withdrawn, the required investment is based on unindexed long-term capital gains. However, if you choose to pay tax instead, you may opt to pay tax at 12.5 percent on unindexed gains or at 20 percent on indexed gains.