Long Term Capital Gain and income tax

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My Father who is 75 years of age is earning close to 1.5Lakh as pension and he sold some agricultural land for 20 lakhs which he bought in 1982 for 30000. How much would be tax he'll have to pay for 2010-2011?

Thanks

agricultural-land long-term-gains capital-gains income-tax
1 Answers

Your land will not be counted as capital asset if Land is outside the jurisdiction of a municipality area or not even within eight kilometers of municipality area. In the above case, there won't be any income tax liability on sale of land.

But if land falls under urban area, long term capital gain will apply here and a 20% income tax is payable on capital gains with indexation calculations. Following is the computation of same.

Purchase Year = 1982-83, Purchase Cost = 30000, Cost inflation index (CII) for purchase year = 109
Sale Year = 2010-11, Selling price = 2000000, CII for sale year = 711

Indexed Purchase price = 30000 x (711/109) = 195688
Long term capital gain = 2000000 - 195688 = 1804312
Income tax on capital gain = 1804312 x 20% = 360862.4

Pankaj Batra5212

Thanks Pankaj. That's really very helpful.

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