20 June 2011
Assesses ha pur a land in 1997. Simultaneously Took a loan form bank (Housing loan)to construct house, in yr 2010 he sold the land and pay the housing loan(full n final pmt) Tell me the treatment of capital gain on such Assesses (house is being occupied by him presently)
20 June 2011
Dear Pankaj, When you sell the land (hope it is not a rural agricultural Land),, you have to pay capital gain tax @ 20% after taking indexation benefit on cost of acquisition.
21 June 2011
Your question is not complete as you have stated that land was purchased in 1997. In 2010 he took loan for construction of house and the entire loan is paid against sale of land and the person concerned is stying in the house. If it is so then on which land the house is standing?
ANY HOW LET ME GIVE YOU THE SOLUTION; First you take the sale consideration of the land which you have sold From the sales consideration you deduct the index cost of the land What is index cost? You have to take the cost of your land and the same is to be increased by the index fixed by the Govt. for calculation of Capital gains. If in 1997 the index cost was say 207(assumed) and in 2011 it is say 555(assumed), then suppose the original cost of the land plus any improvement in the land i.e boundary wall etc. is Say 5,000/- (assumed) which is to be dived by the cost index in 1997 and multiplied by the index cost in 2011.
The value so arrived shall be the capital gains on which you have to pay Capital Gains Tax @ 20%. In case you want to avoid to pay the tax then you can deposit the money up to 50 lacs in the government Bonds. Further without depositing you can take the benefit of Section 54F as you have constructed the house within 3 years but for that also there are some conditions.
As you have not supplied the actual dates with the amount, it is very difficult to give proper and correct answer.
If you supply the dates and amount the answer can be given as per the Act.
CAclubindia
