Long Term Capital Gains - Housing Property

Nisha 1
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Hello Pankaj,

I had purchased a property in the year 2006(Of which I am the sole owner). The cost of the property in the year 2006 was around 10Lacs(I have a home loan for 7.45L) & the current Market value of which is around 30Lacs. After 2 years, me & my husband purchased a property,(current residential property)in both of our names. Now I wish to sell the property purchased in the year 2006. Can you please let me know about tax exemption from LTCG by investing in infrastructure bonds? Suppose I decide to sell the property at 30L is it possible to get full exemption from LTCG by investing in these bonds? Is there any other alternate solution to get exemption from LTCG?

Thanks! Nisha

section-54ec long-term-gains capital-gains ltcg income-tax
1 Answers

As per below computation, long term capital gain will come out as 14.88 lacs. Income tax will be payable @ 20% on this gain.

You can save this tax fully, under section 54EC, if you invest this gain amount (whole sale consideration amount in case the property is not a residential house/flat/apartment) into capital gains bonds (issued by NHAI and REC).

Other option to save tax is under section 54 (54F in case property being sold is not a residential one). Under this section, you can buy another residential property with this gain amount.

Purchase Year = 2006-07
Purchase Cost = 1000000
Cost Inflation Index (CII) for purchase year = 519

Sale Year = 2011-12
Selling price = 3000000
CII for sale year = 785

Indexed Purchase price = 1000000 x (785/519) = 1512524
Long term capital gain = 3000000 - 1512524 = 1487476
Income tax on capital gain = 1487476 x 20% = 297495.2

Pankaj Batra5212

Thanks Pankaj..The information is of great help!!

Nisha•
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