Dear Sir,
I require your genuine help now.I had purchased a property in 2004 for Rs.400000 (Rupees Four Lacs Only) and have sold the same on 08/03/2012 for Rs.725000 (Rupees Seven Lacs Twenty Five thousand Only). I was informed that if I keep the same with BOI under their Capital gain tax scheme for five years and once the period is over I would be able to utilise the money as it would be free from tax.
Please advice.
Sandeep Butaney 9821207228
Please see long term gains and income tax computation first:
Purchase Year = 2004-05, Purchase Cost = 400000, Cost Inflation Index (CII) for purchase year = 480
Sale Year = 2011-12, Selling price = 725000, CII for sale year = 785
Indexed Purchase price = 400000 x (785/480) = 654167
Long term capital gain = 725000 - 654167 = 70833
Income tax on capital gain = 70833 x 20% = 14166.6
Income tax on this gain is just Rs 14,000. You may consider paying this tax and use amount anywhere after that without any lock-in.
Still if you want to save this tax, you can invest into capital gain bonds (u/s 54EC) for three years which would give 6% annual return. If sold property is not a built-up residential house property (flat/house/apartment etc) then whole sale consideration amount would have to be invested to save full income tax. If sold property is a residential house property, only gains part (around 71,000) has to be invested. Investment in these bonds can only be done within six months of sale.
