Ltcg

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 October 2012 Dear Mr.Expert,

Hi! I have a query on the subject above.I trust you will answer them on priority.

I have read all related articles , but I am not sure how to work it out.

We have a ancestral house property in Mumbai city.We are selling it in coming 30 days.

My grandfather purchased the property in 1945 for Rs.50000/- .In the year 1966 one more floor was added to the building at a cost of Rs.5 lacs by my father.

grandfather died in the year 1972.the property was inherited by my father my 2 uncles and my

grandmother in 1/4 share each.Thereafter my grandmother died in 1989.

My father died in Dec 1990. his share was inherited by my mother and we three offsprings in 1/4th share each.

Now i am 1/12th beneficiary for the gross sale proceeds minus lawyers fees (my share) . My gross share / receipt may be around Rs.45 lacs.

To work out my LTCG liability - whether indexed cost calculated on gross/net sale price of property and deducted to my share of amount OR indexed cost calculated on my share 45 L, and deducted from my share

I hope you get my point the complicity is in calculation of Indexed cost.

OR i will put it in other way .To find my repeat my tax liability (LTCG) whether indexed cost is worked out on total amount received (5.5 Cr) or my share amt.(45L) received

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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27 October 2012 You have to get valued the property from an approved valuer to ascertain the value of the property as on 1.4.1981.
.
The value so ascertained will be treated as cost of acquisition and the same will be indexed by multiplying the cost inflation index of the year of sale. The product so received, has to be divided by 100 to get indexed cost of acquisition of the full property.
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1/12th of Indexed cost so arrived, has to be deducted from 45 lacs- i.e. Sales Consideration being received by you for your share in the property.
.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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28 October 2012 Yes I agree with the expert Mr. Paras Bafna. In addition the above if you want to save the capital gains then invest in the approved bonds as per provisions of Section 54EC where gross sale value is to be invested for 3 years and no capital gains shall apply as the share is below 50 lacs.

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