Value of property at the time of purchase-which is the way to calculate

A flat purchased in 1999 was registered at 3.9lakhs only. For capital gains tax calculation, what shall be the value of the property? Shall I take only the registered value or sum of registered value of the property and the registration duties paid? What about the interior which was done? How the value shall be computed and what evidence do I need to give to tax authorities? Is Capital gains tax calculated by the tax payer and declared or will there be a scrutiny? I want to do a clear dealing so that I do not give chance for corruption.

asked Sep 17 '11 at 20:13 by Shankar 1612


Registration charges and stamp duty paid can be added to property cost.

For capital gain computations, indexation rules needs to be followed. A sample calculation is shown below.

Purchase Year = A
Purchase Cost = P
Cost Inflation Index (CII) for purchase year = X

Sale Year = B
Selling price = Q
CII for sale year = Y

Indexed Purchase price = P x (Y/X) = R
Long term capital gain = Q - R = S
Income tax on capital gain = S x 20%

Amount spent on interior work like paint, furniture etc cannot be added to cost. If a structural change is done like addition of floor, another room etc is done, that cost can be added.

Be truthful in income tax return. In case tax department has some doubts, they may raise a query and call for scrutiny. If income tax department

answered Sep 24 '11 at 00:47 by pankaj 5.2k320

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Asked: Sep 17 '11 at 20:13

Seen: 956 times

Last updated: Sep 24 '11 at 00:47