I understand that a tax payer can choose calculation of capital gain either by using indexation method or without indexation method whichever is beneficial to him.
Eg.: A plot purchased in Sep 2005 for ₹35000/- and sold for ₹250000/- in July 2018 .
1.As per indexation method: capital gain is 250000 minus 35000×280÷117=166240 (250000 minus 83760)
Capital gain tax is ₹33248 (20% of 166240)+ education cess.
2.If calculated without indexation: capital gain is ₹215000/- (250000 minus 35000)
Capital gain tax is ₹21500 (10% of 215000)+ education cess.
Thus in this case calculation of capital gain without using indexation method is beneficial to the tax payer.
Please clarify. Thanks.
For plot or immovable property, Long Term capital gains is calculated only based on indexation with 20% tax. The other option not applicable.
Generally, long-term capital gains are charged to tax @ 20% (plus surcharge and cess as applicable), but in certain special cases, the gain may be (at the option of the taxpayer) charged to tax @ 10% (plus surcharge and cess as applicable). The benefit of charging long – term capital gain @ 10% is available only in following cases :
1) Long-term capital gains arising from sale of listed securities and it exceeds Rs. 1,00,000 (Section 112A);
2) Long-term capital gains arising from transfer of any of the following asset:
a) Any security which is listed in a recognized stock exchange in India;
b) Any unit of UTI or mutual fund (whether listed or not) and
c) Zero coupon bonds
Refer:: incometaxindia/tutorials/20 ltcg
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