LTCG for Sale of Tenancy Rights to Pagdi Property?

Yes, LTCG tax applies to the sale of tenancy rights of a Pagdi property if held for more than 36 months, taxed at 20% with indexation.

LTCG Calculation:

LTCG=SalePrice−IndexedCostofAcquisition(COA)

• 
  If acquired before [deleted]: Use Fair Market Value (FMV) as of [deleted].
• 
  If inherited/received free: COA is NIL, making full sale amount taxable.

Ways to Save Tax:

1. 
   Section 54F: Buy a new house within 2 years (purchase) or 3 years (construction).
2. 
   Section 54EC: Invest in NHAI/REC Bonds within 6 months (max ₹50 lakh, locked for 5 years).
3. 
   Gift Planning: Transfer to a lower-income family member before selling to reduce tax.
4. 
   Advance Tax: Pay if liability exceeds ₹10,000 to avoid interest.

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- Sale of tenancy rights is a capital asset

- To classify such rights as long term capital asset, the holding period should be more than 36 months otherwise it would be a short term capital asset

- Cost of acquisition is generally NIL but in Pagdi system it is the amount of Pagdi paid

- Long term capital gain would be sale consideration less indexed cost of acquisition. (LTCG) is taxable @20%. To save tax on LTCG, you can invest the proceeds in new residential property u/s 54F, in capital indexed bonds u/s 54EC 

- STCG would be sale consideration less cost of acquisition. STCG is taxable at normal slab rates 

As you sold out the rights in June 23 (i.e. A.Y. 2024-25), assuming you have shown the transaction in the ITR of the year 2023-24. If the ITR has not been filed till date or the transaction was not shown in the original ITR filed then you can file the updated ITR

For detailed discussion you may opt for phone consultation

If you've sold the property in June 2023, you should have filed your Income Tax Return for the assessment year 2024-25 latest by December 2024. Now the time limit is over. You may need to file updated return or seek condonation of delay.