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capital gain calculation

(Querist) 31 January 2010 This query is : Resolved 
we 5 brothers have sold our ancestral housee of 10 marla at chandigarh n each got 13.70 as share. now please tell me how to calculate the capital gain amount on 13.70lakh and where can i find it.the house was bought in 1967 and sale completed in jan 2010
thanks
Guest (Expert) 31 January 2010
NANDKUMAR B.SAWANT.M.COM.LL.B.(MUMBAI),ADVOCATE
MOBILE.09271971251
e.mail.adv.nbsawant@yahoo.co.in
e.mail.nandkumarbs@sify.com

REGARDING THE PROBLEM KINDLY NOTE THAT
1.YOU MAY INVEST THE SAID AMOUNT IN PURCHASE OF RESIDENTIAL HOUSE FOR YOU SO THAT YOU WILL SAVE TAX AS MENTIONED IN YOUR PROBLEM.
YOU MAY SEND FURTHER DETAILS SO THAT CAN HELP YOU.
WITH BEST REGARDS TO YOU YOUR FAMILY AND FRIENDS.
THANKING YOU
YOURS SINCERELY
NANDKUMAR B.SAWANT.M.COM.LL.B.(MUMBAI),ADVOCATE
A V Vishal (Expert) 31 January 2010
In your query the cost of the property as on 1-4-1981 is not mentioned which forms the base for calculation of LTCG. However here is the detailed procedure to calculate the capital gains on sale of your ancestral property.
The purchase price that needs to be used for calculating the long term capital gains is thus called the Indexed Cost of Acquisition.

Indexed Cost of Acquisition = Actual Purchase Price * (Cost Inflation Index during the year of sale / Cost Inflation Index during the year of purchase)

Also, in case of a house, you can add the cost of improvement incurred during your ownership of the house. Again, this cost can be indexed (and therefore, increased).

Indexed Cost of Improvement = Actual Improvement cost * (Cost Inflation Index during the year of sale / Cost Inflation Index during the year of improvement)
And, Long Term Capital Gain = Sale Price - Indexed Cost of Acquisition - Indexed Cost of Improvement. Further this amount viz capital gains needs to be invested in the modes prescribed under the Income Tax Act or you will end paying tax @ 20% on the gains so calculated.

Cost Inflation index for 1981 is 100 & 2009-2010 is 632.
charudureja (Querist) 31 January 2010
Mr Vishal , thats what i dont knw the cost on 1981 thats why i mentioned the place was in chandigarh.
and i dont want to invest in residential house.
Raj Kumar Makkad (Expert) 31 January 2010
I do agree with nandkumar.
A V Vishal (Expert) 31 January 2010
You have to request the local registration office for the rates prevalent during 1981, from which you need to arrive at the base.
Kumar Thadhani (Expert) 01 February 2010
NO matter you do know the cost as 1-4-1981 but you need to have property valued by registered valuer at your hometown at MARLA CHANDIGARH who is registeed over there ask him to value te property and to give valuation certificate/ report of your property as the on the said 1-4-1981. and follows the expert advice of Mr vishal as above.
soumitra basu (Expert) 02 February 2010
I agree with Mr Thadhani
Vineet (Expert) 02 February 2010
There are three ways you can find out property vaue as on 1-4-1981:

1. Find out any transaction of residential house in same loacality during the relevant period.

2. Find out the value , which registration authorities were adopting for the purpose of stamp duty during that period. This value is normally higher than transaction values. So better find out this value to your benefit.

3. Entrust this to a registered valuer as sugested by Mr Thadani who will charge a fee.

3.


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