long term tax gain

Hi ,

I have a query , my dad purchased a land in the year 1988 for 35k

Now we have sold that land for 10,87,000

What would be the LTCG for the same ?

How can we save , I mean where to invest ?

If I plan to buy a property now and take money from dad ( retired ) how can we transfer the money anythng to be

paid by me ??

the tax when calctd comes to 1.86 lacs plss confirm. since dad is senior ctzn hope he doesnt have to pay anythg.



asked Mar 27 '12 at 14:37 by teja402000 1111

See long term gains and income tax computation below:

Purchase Year = 1988-89, Purchase Cost = 35000, Cost Inflation Index (CII) for purchase year = 161
Sale Year = 2011-12, Selling price = 1087000, CII for sale year = 785
Indexed Purchase price = 35000 x (785/161) = 170652
Long term capital gain = 1087000 - 170652 = 916348
Income tax on capital gain = 916348 x 20% = 183269.6

In order to avoid tax on this LTCG fully, one can buy a residential house property u/s 54F or invest into capital gain bonds u/s 54EC. Please note that in order to save tax fully, whole sale consideration amount needs to be reinvested and not only LTCG. If reinvestment amount is less, income tax would be payable on remaining unused sale consideration proportionally.

answered Mar 27 '12 at 17:22 by Pankaj Batra 5.2k320

Hi Pankaj , Thanks for the expln. but what if i plan to buy a house and borrow money from dad ? Is it necessary for me to make him co-owner
(Mar 27 '12 at 17:35) teja402000
If sold property was in your dad's name, capital gains would be his and income tax liability would also be his. If new property is purchased in your name, on tax benefit would be applicable. If he is co-owner is new property, tax benefit would be applicable only on cost of his part of share in new property.
(Mar 27 '12 at 18:08) Pankaj Batra
Ok thanks very much for the explaination.
(Mar 27 '12 at 18:36) teja402000
Hi Pankaj , I would like to know finally how much tax my dad ( retired ) needs to pay ?
(Mar 27 '12 at 20:54) teja402000
If he does not have any other taxable income, he would have to pay 20% income tax on LTCG - 2.5 lakh. So 20% tax would be payable on remaining Rs 666348.
(Mar 27 '12 at 20:57) Pankaj Batra

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Asked: Mar 27 '12 at 14:37

Seen: 1,329 times

Last updated: Mar 27 '12 at 20:57