Capital Gains tax

Sonali 1
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Dear Sir,

I had purcashed a flat in April 2007 (Registration in my name)directly from builder for RS. 10,00,000/-. Can I include the society formation charges. etc in cost of flat paid at the time of purchase. The flat was sold in August 2010 for AED 30,00,000/-. How much is the LTCG on the same after CII. Further, I would like to know that these capital gains I have invested in purchase if new residential flat.I have received the allotment letter but have nto got the flat registered in my name before due date of filing the return of income for AY 2011-12, only invested the capital tgains. So, as per Indian Income Tax, can I still get the Section 54 claim - as amount invested but flat not yet registered and no stamp duty paid?

residential-flat long-term-gains section-54 capital-gains income-tax
1 Answers

You won't be able to include society formation charges in cost. Only stamp duty, registration charges and additional construction cost can be added.

Below would be income tax and long term gain computation:

Purchase Year = 2007-08
Purchase Cost = 1000000
Cost Inflation Index (CII) for purchase year = 551

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

Indexed Purchase price = 1000000 x (785/551) = 1424682
Long term capital gain = 3000000 - 1424682 = 1575318
Income tax on capital gain = 1575318 x 20% = 315063.6

if you buy a new residential house property for cost more than 15.8 lacs, no income tax would be payable on gains u/s 54.

New flat must be registered in your name within two years of old flat sale.
But if this is not done before tax return filing of sale financial year, whole gains has to be invested into capital gain account scheme (CGAS). This should have been done by you.

Now you should immediately deposit the amount into CGAS and file a revised return, otherwise income tax department may demand income tax on gains.

Pankaj Batra5212
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