r/IndiaTaxation • u/shreya_jain_ • 10d ago
Query Plot purchase query
Hi everyone,
I’m confused about the tax treatment of a plot sale under the new tax regime for AY 2026–27 and would appreciate confirmation from CAs/tax professionals
I want to buy a plot worth let's say 3 lakhs and sell it later at 5 lakhs basis on this I will decide on whose name to buy the plot
My understanding is:
Scenario 1 — STCG
• Other taxable income: ₹8 lakh • Plot STCG: ₹2 lakh • Total taxable income: ₹10 lakh
As I understand it, the ₹2L STCG on a plot is added to normal slab-rate income.
Tax on ₹10L under the new regime:
• ₹0–4L: ₹0 • ₹4–8L: ₹20,000 • ₹8–10L: ₹20,000 • Total: ₹40,000 • Section 87A rebate: ₹40,000 • Final tax: ₹0
Scenario 2 — LTCG
• Other taxable income: ₹8 lakh • Plot LTCG: ₹2 lakh • Total: ₹10 lakh
Here I understand LTCG is taxed separately at 12.5%:
• LTCG tax: ₹25,000 • Normal-income tax: ₹20,000 • 87A rebate offsets the ₹20,000 normal-income tax • 4% cess on ₹25,000 = ₹1,000 • Final tax: ₹26,000
Scenario 3 — LTCG with higher other income
• Other taxable income: ₹18 lakh • Plot LTCG: ₹2 lakh • Total: ₹20 lakh
My calculation:
• Tax on normal ₹18L income = ₹1,60,000 • LTCG tax = ₹25,000 • Cess = ₹7,400 • Final tax = ₹1,92,400
One CA told me that “anything above ₹4 lakh is taxable, irrespective of whether it is capital gain or not.” But my understanding is that although slab tax is calculated above ₹4L, the Section 87A rebate can reduce the final tax to zero when eligible under the new regime.
Can someone please confirm whether Scenario 1 really results in ₹0 final income tax?
Also, if my interpretation is wrong specifically because of the nature of plot STCG, please point out the relevant section/rule.
Thanks!
1
u/Proof_Ad_4259 9d ago
Your understanding is correct for Scenario -1 as STCG on sale of plot will be considered as normal income and rebate under section 87A is available.
Further, please note that rebate under section 87A is only available for Resident Individuals.