Computation of Long Term Capital Gains


I had purchased a piece of land in Nov 2006 for INR 23 lacs. I now plan to sell it at INR 49 lacs. My questions are as under:

  1. The CII for Nov 2006 would be 519 (FY 2006-07) and if i sell it by March 2012, the CII would be 785. If i sell it after March 2012, I need to look at the CII for 2012-13. Are my assumptions right?

  2. Do i need to add in cost of registry and stamp duty to the acquisition cost of 23 lacs for arriving at LTCG? Also, I found out that my tax implications are higher with indexation @20% then without indexation @10%. Do i have the option of not using indexation.

  3. When I file my taxes for the FY 2011-12, do i need to show the LTCG? I intend to purchase a flat within the next 2 years. Where can i open a CGAS e.g. in banks like HDFC?

  4. I need to invest just the LTCG (approx 10 lac with indexation) and not the purchase price of 49 lac to save taxes. Is my assumption right?

  5. What happens if the purchaser decides to register the property at a price lower then INR 49 lacs. I plan to do the entire transaction in bank cheques / demand draft.

I know i have lot of questions but would appreciate a quick response.

Regards, Vinay

asked Jan 10 '12 at 16:26 by tanvinay 1233

  1. If you sell plot after March 2012, CII of 2012-13 would be used for computation of LTCG. But keep in mind direct tax code as well, which may change taxablity of gains.
  2. Yes, you can add cost of registry and stamp duty to the acquisition cost before computing LTCG. Computation without indexation is not available for such gains from property sale.
  3. You would need to show capital gains under LTCG and claim benefit under section 54F. You can open capital gain scheme account with any nationalized bank.
  4. As you sold land, in order to save tax fully, you would need to invest whole sale consideration amount into new property u/s 54F.
  5. Price mentioned or current government circle rate, whichever is higher, would be used for LTCG computation.

answered Jan 10 '12 at 21:22 by Pankaj Batra 5.2k320

Hi Pankaj, Thanks for detailed response to my queries. Now that you have answered them, I am in search of new answers :) Do I need to deposit the entire sale amount in CGAS or just the capital gain? Can I first deposit the amount in my savings account and then transfer it to CGAS later? When I withdraw the amount from CGAS, can i get the money in my name or it has to be necessarily in the name of a builder / seller of a property? And thanks once again for being so meticulous in responding. Regards, Vinay
(Jan 17 '12 at 09:28) tanvinay
As gains is from sale of land, whole sale consideration amount has to be deposited into CGAS. This has to be done before income tax filing for financial year in which land is sold. Amount from CGAS can only be withdrawn in form of demand draft/cheque issued in name of builder/seller of property or construction material supplier/contractor (in case of construction of house). Remaining/Left over amount may be withdrawn only after written permission from assessing officer.
(Jan 22 '12 at 20:32) Pankaj Batra

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Asked: Jan 10 '12 at 16:26

Seen: 2,318 times

Last updated: Jan 22 '12 at 20:32