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Capital gain

14 February 2014

Hello,

I had purchased a land or say underconstructed house as on 1/4/95 for Rs.41,000. Than in next 4 months I construct the house and make it to live. Repairs cost me Rs.20,000 as on 1/8/95. Than as on 01/04/00 I constructed the whole house again that costs me Rs.1,50,000 (now it is not underconstruct). Than I made registery of my house as on 01/08/10. Now I am the legal owner of my house, rather all necessary documents of my house is with me from the first date. Now I want to sell my house for Rs.20,00,000 as on 14/02/14.

What will be the amount of capital gain that I had to pay?

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6 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 14 February 2014

Sale consideration = Rs. 20,00,000/-

Less Indexed Cost of acquisition = Rs. 2,03,839/- (61,000 x 939/281)

Less indexed cost of improvement = Rs. 3,46,921/- (1,50,000 x 939/406)

Long term capital gain = Rs. 14,49,240/-

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Arpit Pachisia (CA) (734 Points)
Replied 14 February 2014

Is registry date make any impact in this question? Is this date is irrelevant, as if there is no change for computing taxable profit? FMV as on 31/8/10 is Rs.6,00,000.

Arpit Pachisia (CA) (734 Points)
Replied 15 February 2014

what happens to 12,35,210 members of CA Clubindia.

Cann't they answer this query??

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 15 February 2014

Possession of property is important but not Registration of property in your case as you transfer the property only after registration and further fair value does not really matters but real matter is Stamp value adopted by Stamp authorities and fair value matters when either your cost of improvement or acquisition cost was before 1991 as there is no capital gain indexation table before

Arpit Pachisia (CA) (734 Points)
Replied 15 February 2014

But only after registration of such property, you can claim na to be legal owner of the property. Papers of property was with me, but still at that time property was named to such other person. Isn't this create any impact??

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Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 15 February 2014

Well,Your doubt is certain and i think your doubt is regarding Indexation beifit.In your case you did not acquire house from others,you yourself constructed your house,so there will be no problem,but you should have bills for all expenditure incurred at the time of construction such that you can claim benifit of indexation from the date of acquisition rather than date of registrarion and furthur legal ownership is must and should at the time of transfer but need not to be at the time of improvements made to your property.So there may not be any impact in your transaction