i had purchased a land for 2 lacs in 1989 and taken a loan to run the business The land was given in equitable mortgage.The bank went to the DRT and finally in 2009 I paid a sum of 45 lac to clear the due to bank . sold the land for 55 lakhs , in 2010 .Now my LTCG will be approx 10 lac . can the payment to the bank be taken into account to reduce my LTCG ?
1 Answers
Your capital gain will be computed with purchase price 2 lacs in 1989 and sale price of 55 lacs in 2010. Payment to bank for clearing loan cannot be considered here.
Below will be your long term capital gain and tax computation:
Purchase Year = 1989-90
Purchase Cost = 200000
Cost Inflation Index (CII) for purchase year = 172
Sale Year = 2010-11
Selling price = 5500000
CII for sale year = 711
Indexed Purchase price = 200000 x (711/172) = 826744
Long term capital gain = 5500000 - 826744 = 4673256
Income tax on capital gain = 4673256 x 20% = 934651.2
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