17 July 2013
How to compute tax liability in the following scenario
In 2012 Sale of a piece of land with 2 buildings, inherited from deceased father in 2010.
Sale done for land and buildings together.
Father had acquired the land in 1970 as gift. fair value market price of land in 1981 - Not known Fair value market price of land in 2000 = A Fair value market price of land in 2003 = B
1st building constructed in 1976. cost = X 2nd building constructed in 1996. cost = Y
Specific queries - 1. Is it possible to estimate fair value market price for 1981 from the values in 2000 and 2003?
2. Will it be right to calculate the indexed price for year 2012 from the values of 2000 or 2003 in case the value of 1981 is not known?
3. For the total cost of acquisition is it okay to calculate indexed cost of property 2012 as calculated from (2) above plus indexed cost of improvement (Improvement as indexed cost of construction of the two buildings)
4. If the long term capital gain thus calculated comes negative, and this negative amount is more than the income from his annual salary, then can the person claim for a refund for the TDS deducted as per his salary?
25 August 2013
You have to get the 1981 value done by a registered valuer and then indexation cost is to be calculated on the basis of cost index table. The selling price minus index value shall be deducted and the balance shall be treated as Long Term Capital Gain.
The negative LTCG shall be carried forward and shall be adjusted against the positive LTCG within 8 years.
Negative balance of LTCG cannot be adjusted against salary and no refund of TDS can be granted to you.
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