How Bangalore Buyers and Sellers Report a Property in the AY 2026-27 Tax Return

Selling or buying a home in Bangalore is not a private matter as far as the tax department is concerned. Every registration is passed on to it, and the tax a buyer withholds shows up under the seller's PAN. This article follows the money for each side in the 2025-26 financial-year return, and closes with the options left in October 2026 for late or non-filers.

The Seller's Route

Selling after two years of ownership creates a long-term capital gain (LTCG), charged at a flat 12.5% with no indexation. A sale within two years creates a short-term gain, which is combined with other earnings and charged at the slab rate. A resident individual or HUF that acquired land or a building before 23 July 2024 may pick 20% with indexation if it yields less tax.

If the duty value set by the registrar is above 110% of the price, it is treated as the price. Cost of acquisition takes in the duty and registration fee paid on purchase, and spending on improvements is added. Details needed for the schedule:

• The consideration and the duty value
• Cost, purchase date and each year's improvement spending
• Brokerage, legal fees and other transfer costs
• Who the buyers are, and where the property is

Bank statements and invoices should be kept as proof for each entry. They are the first thing asked for if a notice arrives.

Which form carries the gain

The gain goes in ITR-2 or ITR-3. Salaried sellers and others without a business use ITR-2, while sellers who run a business or practise a profession use ITR-3. ITR-1 is closed to property gains, and the wrong form can leave the return open to a defect notice.

Saving Tax on a Long-Term Gain

Reinvesting can trim the LTCG, or remove it. Three provisions do the work:

• Section 54 covers a house sale whose gain buys a new residential house in this country
• Section 54F covers sale of some other asset, such as a plot, with the net price put into a home
• Section 54EC covers land or building gains of up to Rs. 50 Lakhs, placed in specified bonds in the following six months

Timing matters. Buy the new house from a year before the sale up to two years afterwards, or complete construction in three years. Cost beyond Rs. 10 Crore is ignored. Section 54F gives a full exemption only on complete reinvestment of the net consideration, and a smaller sum earns a proportionate share.

A seller who already owns a second residential house on the sale date cannot use 54F for the new one. Each exemption has to be claimed in the return, as none is granted on its own. Whatever remains unspent at the due date goes into a Capital Gains Account Scheme deposit with a bank.

Timely filing protects a loss. A capital loss from the sale can be carried forward for eight years, but only if the return is in before the due date.

The Buyer's Route

A buyer paying Rs. 50 Lakhs or more, measured on price or duty value, withholds 1% from every payment to a seller resident in India. For payments until 31 March 2026, Form 26QB carried the tax, due 30 days after the month closed, and Form 16B from TRACES then reached the seller within 15 days. After that date the forms are 141 and 132.

Instalments to a developer mean repeating all of this each time. A non-resident seller brings different rates and steps, so the NRI buyers and sellers reading this should consult an adviser. The buyer's return has no line for a purchase, though Schedule AL asks anyone earning over Rs. 1 Crore to show the property at cost.

The deal is reported anyway, so keep proof of where the down payment came from. A loan sanction letter and bank statements normally serve.

Reconciling With AIS and Form 26AS

For FY 2025-26 the sub-registrar reported every deal of Rs. 30 Lakhs and over, and the cut-off rises to Rs. 45 Lakhs from 1 April 2026. Both parties see the entry in the Annual Information Statement (AIS), and the seller sees the buyer's TDS in Form 26AS.

Compare both statements before filing, looking for the deed's price and a TDS credit equal to Form 16B. An incorrect AIS entry is disputed through the feedback option. For a mistaken Form 26QB, the buyer has to file the correction on TRACES.

Regime Choice and the Home Loan

The new regime is the default. Its slabs are lower but it removes the deductions that help a borrower who lives in the property. Under the old regime, the borrower keeps these:

• Section 24(b) interest on an occupied home, capped at Rs. 2 Lakhs a year
• Section 80C repayment of principal, limited to Rs. 1.5 Lakhs and shared with duty and registration charges of that year
• Pre-possession interest in five equal annual parts, beginning with the year of completion

Run the numbers under both regimes for a large loan. The EMI calculator gives the interest and principal for each year. Exemptions on capital gains do not depend on the regime.

Regime choice is the second price of being late. With no business income, the old regime is available only through a return filed by the due date. A belated one falls into the new regime, which forfeits that year's home loan deductions.

Timeline and Fallbacks

Income of 2025-26 is under the 1961 Act, and the 2025 Act begins with later income. The calendar was 31 July 2026 for ITR-1 and ITR-2, 31 August 2026 for unaudited business returns, and 31 October 2026 for audit cases. Belated returns are allowed to 31 December 2026, with a penalty of Rs. 5,000 (Rs. 1,000 up to Rs. 5 Lakhs of income) and monthly interest of 1% on unpaid tax.

A return filed on time that missed something can be revised up to 31 March 2027. Beyond that, the updated return is open for 48 months with extra tax, though it brings no refund and no tax cut.

A Sensible Order of Work

Most mistakes come from doing these steps in the wrong order. A short sequence keeps a property deal tidy.

1. Download the AIS and Form 26AS, then set them beside the sale deed.
2. Work out the holding period and the gain, using indexation only where it is allowed.
3. Decide which exemption fits, and where any unspent money will wait.
4. Pick the correct return form and the tax regime.
5. File before the due date, and keep every paper for later questions.

For a large gain, a chartered accountant can check the working before filing. That small cost is easily worth it.