Cost inflation

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SUBHASH JAIN (Querist)
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11 September 2012 What is the cost inflation rate for the financial year 2012-2013. for the purpose of capital gain. and my another query is that if any person makes the flats on his residential land then at the time of sale , it should be treat as short term or long term capital gain , if he purchased in the 2002 and would sold in the year 2012.

Thanks.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 September 2012 1. The cost inflation index for FY 2012-13 has not been notified yet.

2. An asset is said to be long term if the same is held for a period of 36 months or more.

Since the asset was acquired in the year 2002, it is a long term capital asset.

3. However, if the land was acquired in 2002 and house was constructed later on, then you will need to bifurcate the capital gain.

SUBHASH JAIN

SUBHASH JAIN (Querist)
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11 September 2012 Thank for your reply ,

but here my main query is that if he makes 4 flats on the said Land and sales to the various persons , in that case how should be income tax treatment .
he will make flats in current year. how he will calculate cost inflation and short term and long term.

CMA Nishad Patkar

CMA Nishad Patkar (Expert)
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11 September 2012 It is a short term Capital Gain. When you enter into the transaction of selling of House property in any form, land is indivisible from building. Moreover Land looses it's identity when you sell any constructed Property on said Land. Selling of Land and Selling of Flats constructed thereon are distinct transactions. Hence in your case no CII is applicable and it is a short term capital gain.

Praveen Kumar Rathi

Praveen Kumar Rathi (Expert)
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13 September 2012 CII is not released till now.

cost of construction will be treated like cost of improvement of property , its like that after doing construction the price of property increased so it will be treated as LTCG.

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