long term capital gain

sir, i bought a plot in 1990 for 40,000 . now its value is 70 lacs . i want to sell it and buy a another plot of equal value. how much income tax i am entitled to pay. i dont want to construct the plot in near future.

asked Nov 13 '11 at 12:15 by anurag 1112


Computation for long term gains and income tax is provided below:

Purchase Year = 1990-91
Purchase Cost = 40000
Cost Inflation Index (CII) for purchase year = 182

Sale Year = 2011-12
Selling price = 7000000
CII for sale year = 785

Indexed Purchase price = 40000 x (785/182) = 172527
Long term capital gain = 7000000 - 172527 = 6827473
Income tax on capital gain = 6827473 x 20% = 1365494.6

If you buy another plot and don't construct a house on it, there won't be any income tax benefit and you will have to pay full income tax (around 13.65 lakh).

answered Nov 13 '11 at 14:54 by pankaj 5.2k320

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Hi pankaj, in how much time the house shall be constructed? what will need to do in case you cannot construct house in same financial year?
(Jan 27 '12 at 16:58) ank_gl
You need to complete construction of house before end of three years from date of sale of plot. If construction is not completed before last date of income tax return filing of financial year in which plot was sold, unused sale amount should be deposited into capital gain scheme account. Payment for construction of house should be made from this account in that case.
(Jan 27 '12 at 23:59) pankaj

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Asked: Nov 13 '11 at 12:15

Seen: 1,298 times

Last updated: Jan 27 '12 at 23:59