Dear Mr Batra: We sold our family property in Delhi in June 2011. This property was aquired by my grandfather in 1956 for Rs 50000.00. It sold for Rs 9.40 crores. My share was Rs 2 crores. I opened 2 FD's of 1 cr each at a bank with the proceeds. Can you pls highlight on the capital gains on my share. My share came to be as a result of my grandmother willing it to me in 1994. The deed of the property came in January of 2002 when I was on the actual deed of the property. Can you pls advise on the indexation/my cost basis and available options. Also kindly advise how much would be my share of capital gains tax if I opted that route. Thanks Amit
1 Answers
Below computation needs to be done for calculating long term gains and income tax:
Purchase Year = A
Purchase Cost = P
Cost Inflation Index (CII) for purchase year = X
Sale Year = B
Selling price = Q
CII for sale year = Y
Indexed Purchase price = P x (Y/X) = R
Long term capital gain = Q - R = S
Income tax on capital gain = S x 20%
As CII started from 1981-82, purchase year (A) will have to be taken as 1981-82 and Purchase cost (P) as fair market value of property as in 1981.
CII for 1981-82 was 100 and for 2011-12 its 785.
Once this is computed, your gains will be in same portion in which you had ownership in property. 20% income tax will be payable as income tax on this long term capital gains.
If it was a residential house, section 54 and section 54EC can be applied to avail tax benefit. If it was plot or any commercial property, section 54F and section 54EC can be applied to avail tax benefit.
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