Hi Pankaj, I purchased plot in 2004 in Bangalore, sale agreement of 12.75 lacks (~10 was bank loan) and sale deed as per government value was 2.5 lacks...now for sale if we go with 35 lacks in sale agreement and sale deed may go to ~7 lacks...in this scenario how much tax i need to pay & when ....as I maynot get tax benefit, because planning to close my existing flat loan of 36 lacks... ... thanks
1 Answers
Capital gains will have to be computed on the sale deed/registration prices or corresponding circle rates at that time (whichever is higher).
As per sale deed cost, below is computation for income tax:
Purchase Year = 2004-05
Purchase Cost = 1275000
Cost Inflation Index (CII) for purchase year = 480
Sale Year = 2011-12
Selling price = 3500000
CII for sale year = 785
Indexed Purchase price = 1275000 x (785/480) = 2085156
Long term capital gain = 3500000 - 2085156 = 1414844
Income tax on capital gain = 1414844 x 20% = 282968.8
If you take 2.5 and 7 lacs as purchase and selling price, then income tax will be just around 58000.
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