LTCG on sale of land.

Dear Pankaj ji, I had purchased of a residential plot in the year 1997 which cost 1.29 lakh. Now I am planning to sell the same for 9.25 lakh during current year.If i purchase residential property within two years of sale, am I required to deposit IT in 2011-12 and file the return in 2012-13 accordingly. If yes, would the amount deposited as Income tax be refunded to me? Kindly advice and also calculate income tax required to be paid by me. With regards, Pradeep

asked Jul 01 '11 at 15:12 by jaswal_2006 1111


Below is the computation for long term gain and income tax:

Purchase Year = 1997-98
Purchase Cost = 129000
Cost Inflation Index (CII) for purchase year = 331

Sale Year = 2011-12
Selling price = 925000
CII for sale year = 785

Indexed Purchase price = 129000 x (785/331) = 305937
Long term capital gain = 925000 - 305937 = 619063
Income tax on capital gain = 619063 x 20% = 123812.6

Under section 54F, if you buy another residential property within two years of sale, with amount equal or more than amount of sale consideration (9.25 lakh), then there won't be any income tax payable.

But if the new property is not bought before filing return for FY 2011-12 (31st July, 2012), then whole amount must be kept in a capital gain accounts scheme and all further payments to builder/seller should be done from this account. In this case there is no need to pay income tax in FY 2011-12.

Section 54F also has one condition that you should not own more than one residential property at the time of buying new one. You also cannot sell this new property for three years and cannot purchase any other for next three years.

answered Jul 02 '11 at 11:47 by pankaj 5.2k320

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Asked: Jul 01 '11 at 15:12

Seen: 2,038 times

Last updated: Jul 02 '11 at 11:47