I have purchased a residential plot for Rs.24000 in coimbatore during 1988. I have constructed a house in it spending Rs.2 lakhs. Now I m planning to sell the land and building for about Rs 40 lakhs. I am not having any bill for the amount spend for the building. How will I calculate capital gains tax for the above transaction.Whether I have to approach tax co9nsultant and seek advice.
1 Answers
You can use below computation for capital gains and income tax calculations:
Purchase Year = 1988-89
Purchase Cost = 24000
Cost Inflation Index (CII) for purchase year = 161
Construction Year = 1988-89
Construction Cost = 200000
Cost Inflation Index (CII) for Construction year = 161
Sale Year = 2011-12
Selling price = 4000000
CII for sale year = 785
Indexed Purchase/Construction Cost = 24000 x (785/161) + 200000 x (785/161) = 1092174
Long term capital gain = 4000000 - 1092174 = 2907826
Income tax on capital gain = 2907826 x 20% = 581565.2
Please change figures accordingly.
Ideally you would need construction expense bills (building material etc) to show cost of construction. As if IT department raises a query you will have to show supporting documents.
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