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STCG/LTCG ADDITIONAL EXPENSES CRITERIA

SANJAY (MANAGER) (67 Points)

18 March 2011

If I purchase home in 2000 @ 5,51,000/- and additinal expences like commission 15000/- renevation 1 lacs in 2002 . Is any criteria for showing such expences, Also if i purchase flat and after renevation one month time sold out the flat .The purchase cost was 20 lacs and additional expences 3 lacs. In STCG such additional expenses consider or not and what is the condition for such expenses

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SACHIN JAIN CA FINAL student (INDORE) (233 Points)
Replied 18 March 2011

if you pay any expenses (direct nature) for purchase a house is include in cast of purchase(HOUSE)

any renevation is considered cost of improvement and decided the STCG/LTCG from the preiod of

completing of renevation to sale of assets (for mare than 36 month LTCG otherwise STCG)

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SANJAY (MANAGER) (67 Points)
Replied 22 March 2011

Please clear my point properly As i purchase house and paid commission then internal flooring change, water proffing ,painting,stamp duty,property tax,society charges ,MSEB and furniture. My flat purchase cost was 20 lacs,additinal cost was 5 lacs .Flat was purchase in Feb 2011. Now if sold flat in april 2011 is it all expences consider or not . As the ready recknor cost was 27.5 lack. My question is it all expences consider for STCG. Also in this transaction inflation cost consider or not. Please clea me properly so that accordingly i will make changes in the trasaction.

CA Saiyum khan (Practicing CA) (690 Points)
Replied 22 March 2011

Additional expenses incurred by you of Rs.5 lacs would be considered as cost of improvement even for the computation of STCG. Being STCG inflation wuld not be taken in to account.

You need to keep proper evidences to prove the genuine ness of expense incurred by you.

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SANJAY (MANAGER) (67 Points)
Replied 22 March 2011

In STCG if I made additional expenses as furniture will be consider an additional expense for STCG or not or it will attract stamp duty

CA Saiyum khan (Practicing CA) (690 Points)
Replied 22 March 2011

Furniture cost will not attract stamp duty. You need to bifurcate the same in your sale agreement. However you will be eligible to consider the cost of furniture while computing STCG.