how to save capital gain tax

srimanta 1
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Dear Sir,

I had purchased a flat in 1999 for Rs.6 lacs. I had sold it for Rs.25 lacs in 2012. What is the LTCG and what are the ways to avoid LTCG?

S K Mishra

residential-flat section-54ec long-term-gains section-54 capital-gains income-tax

thanks a lot.

srimanta•
1 Answers

See computation for LTCG and income tax below:
Purchase Year = 1999-00, Purchase Cost = 600000, Cost Inflation Index (CII) for purchase year = 389
Sale Year = 2011-12, Selling price = 2500000, CII for sale year = 785
Indexed Purchase price = 600000 x (785/389) = 1210797
Long term capital gain = 2500000 - 1210797 = 1289203
Income tax on capital gain = 1289203 x 20% = 257840.6

To save this income tax fully, either you can buy another residential house property for cost more than 12.9 lakh u/s 54 or invest gain amount (12.9 lakh) into capital gain bonds u/s 54EC.

Pankaj Batra5212
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