my father had bought a plot in 1975 for rs 14 /sq yard amounting to rs 8000 He then constructed a house on the same spending rs 5 lacs and spent about rs 1 lac and then sold the house in 2011 feb for rs 75 lacs what is the capital gains tax
1 Answers
You need to compute capital gains with indexation computations.
Fair market value in 1981-82 = X, CII (Cost inflation index) for year 1981-82 = 100
Construction Year = A, Construction cost in year A = 500000, CII for year A = P
Renovation Year = B, Renovation cost in year B = 100000, CII for year B = Q
Sale Year = 2010-11, Selling price = 7500000, CII for sale year = 711
Indexed cost price = X x (711/100) + 500000 x (711/P) + 100000 x (711/Q) = R
Long term capital gain = 7500000 - R = C
Income tax on capital gain = C x 20%
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