Selling Flat and buying residential plot

Hi, I had bought a flat in India four years back for 36 lakhs and selling it next month for 55 lakhs. If i buy a residential plot for 27 lakhs, do I need to pay capital gain tax? Thx.

Sal

asked Jun 20 '11 at 12:51 by Salwells 1111


Under section 54, If you buy a plot, income tax exemption is not available. But if you construct a house on this plot within three years of sale, then you can avail tax exemption.

Anyways, your capital gain is not more than 2.5-3 lacs, so you can also consider paying 20% tax on that (less than 60,000 Rs).

answered Jun 23 '11 at 13:27 by pankaj 5.2k320

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Thanks a ,lot, Pankaj. How do you come up with the gain as 2-3 lakhs? Its much more, right? If I construct a house in some other plot (previously purchased) can I get the tax exemption? I am fine with paying Rs 60,000 as tax! Sal
(Jun 24 '11 at 00:41) Salwells
Below is indicative tax computation: Purchase Year = 2007-08 Purchase Cost = 3600000 Cost Inflation Index (CII) for purchase year = 551 Sale Year = 2011-12 Selling price = 5500000 CII for sale year = 800 (has not been declared yet, its assumed) Indexed Purchase price = 3600000 x (800/551) = 5226860 Long term capital gain = 5500000 - 5226860 = 273140 Income tax on capital gain = 273140 x 20% = 54628
(Jun 24 '11 at 07:22) pankaj
And I think you can construct a new house on previously purchased plot too
(Jun 24 '11 at 07:31) pankaj

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Asked: Jun 20 '11 at 12:51

Seen: 1,566 times

Last updated: Jun 24 '11 at 07:31