LTCG computation (with indexation)

LTCG (with indexation)

Mrs. X brought a house (plot) measuring 84 sq mtr in 1997/98 for Rs.700,000.

In 2005, she built Floors 3 Floors (Floor 1, 2,3) …. Lets say she spent 500,000 on these floors but do not have any receipts, however current house tax include the new floors built.

She is now a senior citizen and has 2 sons, Y and Z and wants to sell that house and distribute the money equally among her sons.

Actual price – 700,000 (1998)

Sold in FY 21-22 for Rs.2,50,00,000 (2.50 crore)

indexation of Acquisition

= (700,000*(317/100)) (Actual price*(current CII/CII for 1998)

= 700,000 * 3.17

= 2,21,90,000

Full Value	25,000,000
Less : Commission/ Brokerage (1%)	250,000
Net Value	24,750,000
Less : Indexed cost of acquisition	22,190,000
Less : Indexed cost of improvement	To check if applicable
Exemptions u/s 54	To check if applicable
LTCG applicable on Amount	2,560,000

My queries as below:

- Can she avail Indexed cost of improvement?

- Any exemption u/s 54, or 54EC or 54F.

- If she distribute money among her sons, any tax liability for sons?

- No LTCG if that amount is used by her sons for buying the property within 6 months

- Do Buyer need to pay TDS – 1% on value or can it be avoided.

As per my view & opinion,
1) since property in Q's. is bought before 2000, then value of property must be taken as on 1/4/2001, ( u may go for valuation report by redg. valuer by incometax ) for purpose of indexation
2) since, no reciepts for improvement, nothing can be done
3) exemptions can be claimed.....depends on various sec 54 conditions
4)in case she distributes money. ....without claiming deductions as per sec54, she will have to pay 20 percent tax on capital gains. & balance amt can be gifted
5)sons can show as gift from mother ( after mother paying 20 percent ), and accordingly sec on gifts can be applied for claiming relief of tax
6)it is assessee of seller of land who can claim benifit of 54 sec ( not sons)
7)buyer will have to deduct 1 percent ( as above 50,00,000/-)