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Capital gain

SHAILY GUPTA (TAX CONSULTANT) (106 Points)

20 March 2012

My father had aquired a land in 1997 under "Gadotiya scheme" in gujarat ( plz note that i dnt knw the exact english meaning of it), under that scheme he was just farming on that later on, he paid land revenue tax n become the owner of that land. the land revenue tax amounts to Rs.987/- at that time. no other cost incurred by him. now my father wants to sell this land and the market rate of this land is Approx 1.2 crore. n My father wants to distribute all this amount to his brothers in equal amount. My question is

1. How to calculate Capital GAin in this matter?

2. what ma father has to do to so that he has to pay minimum income tax?

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1 Replies

bcshettyco (Chartered Accountant In Practice) (65 Points)
Replied 20 March 2012

As land (Long term asset being assumed as urban agricultural land) acquired based on a Government scheme, which has waived the cost of the land, which might be mentioned in the settlement deed or transfer deed of the Government. The cost of the land is that of the cost mentioned in the deed,hence same has to be considered as cost after indexation. Net capital gain will be taxed in the hands of the individual (i.e owner of the land). After making the payment of capital gain tax , the individual can distribute the money to any person. To minimise the tax, individual can reinvest the capital gain money in accordance with the section 54B, 54EC & 54F.