we bought a residential flat in 2002 rs 1350000 and are selling the same now in 2011 for Rs 6400000.
kindly advise how much tax will i have to pay....
also is there a way i can save tax completely if i use this money to buy another flat for the total amount in the next one year or two...
can i keep the money that i receive in my savings account...
regards
Please see below computation for long term gains and income tax:
Purchase Year = 2002-03
Purchase Cost = 1350000
Cost Inflation Index (CII) for purchase year = 447
Sale Year = 2011-12
Selling price = 6400000
CII for sale year = 785
Indexed Purchase price = 1350000 x (785/447) = 2370805
Long term capital gain = 6400000 - 2370805 = 4029195
Income tax on capital gain = 4029195 x 20% = 805839
You can save this tax fully, if you invest the LTCG amount (40.3 lacs) into a new residential house property under section 54. New house should be bought within one year before sale and two year after sale of old property.
If new property is not purchased before income tax return filing of sale financial year, this amount should be kept in CGAS capital gains scheme account only.
