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How to calculate long term capital gain

Dip Narayan (Deputy Manager) (772 Points)

16 July 2017

Please guide me calculation procedure of Long term Capital Gain?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 16 July 2017

Refer: https://www.bankbazaar.com/tax/how-calculate-capital-gains.

Plese add last word as 'h,t,m,l' without commas... after the dot.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 16 July 2017

Dear Dhirajlal Sir...
This link is not working....!!!

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Dip Narayan (Deputy Manager) (772 Points)
Replied 16 July 2017

Sir,

The link is not working.

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Dhruv Shah (Article Student) (357 Points)
Replied 16 July 2017

Process to calculate LTCG:

Full value sale consideration
less:
Indexed cost of acquisition
Indexed cost of improvement
Cost of transfer
----------------------------------
Less:
Any investment to take exemption
-----------------------------------
Taxable LTCG

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 16 July 2017

Sorry for typing error....... now the original address given, so please follow it. (not able to type single letter as 'h,t,m,l' without commas)

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jas (B.Com) (75 Points)
Replied 16 July 2017

sir ye Jo indexed cost acquisition ke liye value lete hai...wo actual mein kaha se mile ga ?? ke 2001-2002 mein hmari property Ki value kya thi ..

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 17 July 2017

Patwari certificate............ or valuation report by government approved valuer (CA/Lawyer approved by ITD)

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 22 July 2017

How to Calculate Long-Term Capital Gains?

Start with the full value of consideration
Deduct the following:
- Expenditure incurred wholly and exclusively in connection with such transfer
- Indexed cost of acquisition
- Indexed cost of improvement
From this resulting number, deduct exemptions provided under sections 54, 54EC, 54F, and 54B
This amount is a long-term capital gain

Long-term capital gain = Full value consideration Less expenses incurred exclusively for such transfer Less indexed cost of acquisition Less indexed cost of improvement Less

Expenses that Can be Deducted From Full Value for Consideration

Expenses from sale proceeds from a capital asset, that wholly and directly relate to the sale or transfer of the capital asset are allowed to be deducted. These are the expenses which are necessary for the transfer to take place.

In the case of sale of house property, these expenses are deductible from the total sale price:

Brokerage or commission paid for securing a purchaser
Cost of stamp papers
Travelling expenses in connection with transfer – these may be incurred after the transfer has been affected.
Where property has been inherited, expenditure incurred with respect to procedures associated with the will and inheritance, obtaining succession certificate, costs of the executor, may also be allowed in some cases.

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 22 July 2017

Indexed Cost of Acquisition/Improvement

Indexed cost of acquisition is calculated as:

Cost of acquisition / Cost inflation index (CII) for the year in which the asset was first held by the seller, or 1981-82, whichever is later X cost inflation index for the year in which the asset is transferred.

Indexed cost of improvement is calculated as:

Indexed cost of acquisition = Cost of acquisition * Cost inflation Index (CII) of the year in which the asset is transferred

Cost inflation index (CII) of the year in which asset was first held by the seller or 1981-82 whichever is later

Indexed cost of improvement = Cost of improvement *Cost inflation index of the year in which the asset is transferred

Cost inflation index of the year in which improvement took place

(Note: From FY 2017-18, the base year of 2001-02 will be considered instead of 1981-82)

Why is cost of acquisition and improvement indexed? Indexation, done by applying CII (cost inflation index), is made to adjust for inflation over the years. This increases one’s cost base and lowers the capital gains.

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