28 January 2014
I have made "agreement to sale without possession" for purchase land of value of rs. 700000. for which i have made payment of rs. 70000 only and not made any other payment thereafter.
Then after 5 years, the original owner sold the land for rs. 1 crore and gives rs. 25 lakhs to me as confirming party.
As a confirming party i am liable for capital gain or not ? if yes, then how to calculate CG ?
28 January 2014
By entering into agreement to sell, you acquired "Right to Purchase" in that land. After 5 years you transferred that right in favour of someone else after taking consideration of Rs.25 lakh. By doing this, you have earned Long Term Capital Gain. Apply index on Rs.70000 and compute LTCG. Exemption u/s 54EC and 54F (if conditions satisfied) are available to you.
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