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capital gain please help

Ankush (Student) (1369 Points)

08 October 2018

Please explain how capital gain for land owner will be computed in case of joint development agreement with example.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (183220 Points)
Replied 08 October 2018

After recent amendment ...

Tax liability arises at the time of receipt of completion certificate, or earlier if land owner sells any of the unit/s during construction period.

Sell proceeds.......... the fair market value of the constructed area received by land owner at the time of completion ... along with monetary receipts if any...

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (6511 Points)
Replied 08 October 2018

In order to compute the capital gains on the sale of a house, the following conditions should be taken into consideration:

Short Term Capital Gains - If you have sold your house within a three year period from the time you purchased it, then the profits from the sale are considered to be a short-term capital gain. These gains become a part of your total income and will be taxed as per the existing slab tax rates.
Long Term Capital Gains - If your have sold your house after a three year period from the time of purchase, then any profits from the sale is considered to be a long-term capital gain. Following indexation, this gain will incur a tax of 20%. However, tax exemptions can be claimed in this case unlike in the case of short term capital gains.

If you have brought a property for Rs.35 lakh andsold it after a certain period for Rs.105 lakh, yourprofit is Rs.70 lakh. But that profit is not the capital gain. You have to consider the cost inflation indexation and that considerably reduces your capital gain liability.