Tax on commercial property sale

I purchased office space in 1989 for Rs. 7 Lakhs, for which i paid 4 lakhs upfront and remaining as a term loan repaid fully in 6 years I now wish to retire. If I sell the place (present cost approx 60 lakhs), how much capital gains tax will it attract. Is there a way to reduce the tax? I already have two houses on my name.

asked Jul 15 '11 at 23:02 by mkurve 1111


Below will be the income tax computation:
Purchase Year = 1989-90
Purchase Cost = 700000
Cost Inflation Index (CII) for purchase year = 172

Sale Year = 2011-12
Selling price = 6000000
CII for sale year = 785

Indexed Purchase price = 700000 x (785/172) = 3194767
Long term capital gain = 6000000 - 3194767 = 2805233
Income tax on capital gain = 2805233 x 20% = 561046.6

As you already have two houses on your name, section 54F for income tax benefit cannot apply. Under section 54EC, You can now save income tax by investing this 60 lakhs into capital gain bonds (issued by NHAI and REC)

answered Jul 18 '11 at 17:59 by pankaj 5.2k320

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Asked: Jul 15 '11 at 23:02

Seen: 1,875 times

Last updated: Jul 18 '11 at 17:59