Before proceeding further, have a brief understanding of what capital gain means. When held over a longer period, your property is bound to increase its value, given the period of development and other economic factors.
If you sell your house after 24 months, the profits get treated as long-term capital gains. You can calculate the long-term capital gains by subtracting the house’s indexed cost from its net sale price.
In India, this exemption is only available for investments in one residential house, but income tax laws allow you to invest long-term capital gains on a house in two houses and claim an exemption on the long-term capital gains on one of them.
Exemption on purchase of another house
Another way to avoid paying tax on long-term capital gains is to invest them in bonds issued by certain financial institutions such as the National Highway Authority, Rural Electrification Corporation, Railway Finance Corporation, and others.