I purchased a plot in 1998 for Rs. 28000/- and sold it in 2011 for Rs. 13,50,000/-. Now I want to purchase another plot. Pl advise alongwith the quantum of tax would need to pay, if I can't avoid.
1 Answers
Please find income tax and long term gains computation below:
Purchase Year = 1998-99
Purchase Cost = 28000
Cost Inflation Index (CII) for purchase year = 351
Sale Year = 2011-12
Selling price = 1350000
CII for sale year = 785
Indexed Purchase price = 28000 x (785/351) = 62621
Long term capital gain = 1350000 - 62621 = 1287379
Income tax on capital gain = 1287379 x 20% = 257475.8
You can save this tax fully, if buy another residential house property (section 54F) or invest into capital gain bonds (section 54EC).
There is no tax benefit on buying a land property, but if a house is constructed on same within three years of old property sale, income tax benefit can be availed.
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