capital gains tax calculation for 1988 property

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.

asked Nov 02 '11 at 07:28 by thonour s 1222


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.

answered Nov 02 '11 at 10:37 by Pankaj Batra 5.2k320

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Asked: Nov 02 '11 at 07:28

Seen: 1,747 times

Last updated: Nov 02 '11 at 10:37