A person purchased a portion in a building in 1974 for Rs. 72,000/- .After 2 years he started constrcuting more floors in that building upto 4th floor jointly with his brothers but he got specific share in the constructed property. Out of 4800 sft constructed jointly with his brothers, he got 2000 sft. This 2000 sft along with earlier thing purchased by him in 1974 for rs. 72000/- has been sold in FY 2012-13 for 46 lakhs.
How to calculate capital gains tax involved in it????
You will have to find the value of that building as on 1981.
You will have to compute the cost of constructing additional floors and in which year and how much was your share.
The indexed cost of acquisition will be year 1981 at 100 for the fair market value of that building
The indexed cost of improvement will be the year in which additional fllors were completed for the cost incurred by you.
Then, the indexed cost of acquisition/improvement will be substracted from sale value giving you the capital gain.
fair value as on 1st april 1981 is required for that,
and capital gain is calculated as below,
full value of consideration =46lacs
less: exp incurd in conn with such sale =xxxx
less:indexed cost of aquisition =xxxx
less:indexed cost of improvement =xxxx
in ur case indexation on improvement is not available becuse it is done before 1981,
correct me if i am wrong,
thank u.
CAclubindia
