Capital Gains Tax

Ravi Mittal 1
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Dear Sir

I purchased a plot in Gurgoan in year December 2009 on my name and my mother's name. I started constructing a house on it from Feb, 2010 and since then i am constructing a house which is still not ready. But in Jan, 2012 i sold the basement and ground floor to an individual. My purchase of plot + registry cost = Rs 4565000/- (Rupees forty five lacs sixty five thousand only). Now i am selling the basment and ground floor for Rs 8500000/- (Rupees Eighty five lacs only). My questions are

  1. How much income tax will be charged?

  2. How can i save capital gains tax?

Regards Ravi Mittal

part-sale residential-plot capital-gains
1 Answers

As part of property is sold before end of three years from purchase, it would be short term gains. There is no exemption available for such gain. Whole gains would be added to your taxable income and would be taxed as per slab rates.

Deduct half of the plot cost (22.83 lakh), assuming total floors constructed on plot are four (basement, ground, first and second) plus construction cost of basement and ground floor from sale price to compute short term gains.

Say construction cost for basement and ground floor = 25 lakh. Plot cost = 45.65 lakh Basement and ground floor selling price = 85 lakh Short term gains = 85-(45.65/2)-25 = 37.17 lakh

This is just an indicative computation and you should consult a CA/tax professional to compute actual gains.

Pankaj Batra5212
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