What are the tax implications of investing in real estate?

In India, investing in real estate has various tax implications. Here are some key points to consider:

1. Stamp duty and registration charges: These are levied at the time of property purchase and vary by state.

2. Property tax: This is an annual tax levied by the local municipality or panchayat where the property is located. It is calculated based on the annual rental value of the property.

3. Income tax: If you rent out your property, the rental income is taxable under the head "Income from house property." The rental income is calculated after deducting property taxes, repair and maintenance expenses, and a standard deduction of 30% from the gross rental income.

4. Capital gains tax: If you sell a property, the profit you make is taxable under the head "Capital gains." If you sell a property within two years of purchase, the profit is treated as shortterm capital gains and taxed at your marginal tax rate. If you hold the property for more than two years, it is treated as longterm capital gains, and the tax rate is 20% after allowing for indexation benefits.

5. Goods and Services Tax (GST): If you purchase an underconstruction property, you are liable to pay GST, which is currently at 5% for residential properties and 18% for commercial properties.

It is recommended that you consult with a tax advisor or chartered accountant for more information on the tax implications of investing in real estate.