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Capital Gain

K.K.Majhi (41 Points)

20 June 2007

Querry

Residential Property Purchased in 1990-91 for Rs.190000/=

Sold in 2006-2007 for Rs.900000/=

Construction of Property: Rs 25000/= in 1994-95

? ? ? Amount of Capital Gain Tax and exemtion avialable

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9 Replies

Ashu Gupta (Chartered Accountant) (40 Points)
Replied 21 June 2007

HI This will generate the Long Term capital Gain Calculation will be Sale Consideration : 900000 Less: Indexed Cost 190000*519/182 = (541813) Indexed Cost of Improvement 25000*519/259 = ( 50097) Long Term Capital Gain = 308090 Tax @ 20% = 61618 Add: Surcharge , if any Add: Cess @ 2% = 1232 Total 62850 Can save the tax under section 54 , 54EC Take Care Ashu

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K.K.Majhi (41 Points)
Replied 21 June 2007

Thanks for the Computation you send to me.

Pushpa (CA article) (37 Points)
Replied 23 June 2007

Vk Duggal (320 Points)
Replied 25 June 2007

rs. 25,000 should be considered as cost by using index. pushpa's calculation is correct. exemptions are vailable by making investment which can be used if tax is to be saved.

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(Guest)

any one can tell me hw to calculate income from sale of shares,bonus shares & dividend ie pur value of share is 10000 in 2005-06 bonus 1:1 share dividend is 150% for face value 10 of 100shares.and sales price 10450 in 2006-07

(Guest)

Section 80C imposes time restriction on sale of residential house, the minimum period of holding should be 5 years. If sold earlier, then tax exemption enjoyed shall be withdrawn and the quantum of deduction already taken in the preceding years would be deemed as income of the taxpayer in the year of sale. Again the question of STCG & LTCG arise. Here also tax is imposed as per the provisions of the Act. What I want to know is the total Tax implication if the property is sold before the expiry of 5 years. Whether both 80-C scenario & Capital gain tax will figure in the computation ?

Nalam Ravindranath (78 Points)
Replied 03 September 2007

Before giving any suggestion to your client, get all the particulars from them. Clients do not furnish full details.They assume so many things.So get every thing in writing. Date of purchase of land date of purchase of already constructed house: dates of extensions made: These will provide enough data to work out the index value of the property sold at various stages. Obtain copy of the sale deed to find out the market value fixed by the registration authorities to work out the correct capital gains in the light of most ignored provision 50C. Some of our clients claim a building as residential house,yet they use it business purpose any claim it as a business asset by claiming depreciation,repairs and municipal taxes as business expenditure. Then the asset becomes a depreciable asset, and the capital gains are to be worked out differently and all such capital gains shall be treated as short term capital gains.Be patient, and read the subject by yourself, then ask questions. Do not follow without understanding the intricate problems involved. This is being suggested to you to strengthen your professional career.