Scenario:
Residential flat purchased in the year 1984 in Mumbai. Area of the flat was 217 sq ft (20.16 sq. mt).
Building goes for redevelopment in 2006 and possesion of flat received in 2012. Stamp duty and registration for the redeveloped flat was paid in 2006.
Area of the flat received is 387.71 sq ft (36.02sq mt)
For capital gains calculation which years indexation value to be considered - 2001, 2006 or 2012?
1. From the Finance Act, 2018 indexation base year got revised totally by keeping the base year from 2001. So every property for which indexation benefit is available will need to be calculated from the base year 2001.
2. Technically, FMV as on 2001 is to be determined and keeping the FMV on 2001, indexed cost of acquisition (COA) is to be arrived till the date of sale of the property.
3. In your case since FMV as on 2001 will only include old flat consisting of 217Sq ft, hence that can be taken as FMV and indexed cost of acquisition can be arrived for the same.
4. For the cost incurred towards re-development, indexed cost of improvement can be arrived for expenses incurred from the year 2006 to the year 2012 by using the indexation table for every year.
5. Thus, you have Indexed COA and indexed COI and arrive at LTCG u/s 112.
Please correct me if the above interpretation has an alternative view.
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