Capital gains
PRADIP KUMAR DE
(Querist) 26 August 2013
This query is : Resolved
One property was purchased in 1987 at Rs.3.5 lakhs.
By selling it now I am getting Rs.20 lakhs i.e. capital gains of Rs.16.5 lakhs.
The whole amount to be spentwithin 2 years for construction of a new house for which land is acquired from mother which is in my name and my elder brother.
Please let me know the tax implicatin on the capital gain amount for the above mentioned transactions.
PRADIP KUMAR DE
Anirudh
(Expert) 27 August 2013
Capital gains = selling price (minus) indexed cost of acquisition (minus) indexed cost of improvement (minus) expenditure incurred in sale of the property.
Assuming that in your case, you did not incur any expenditure on improvement of asset and you did not incur any expenditure in sale of the asset, the capital gain would be as under:
Original cost of acquisition in the year 1987 was Rs. 3.5 lakhs.
Indexed cost of acquisition = 3,50,000 x 939 divided by 150 = 21,91,000
(150 is the index for the year 1987-88 while 939 is the index for the year 2013-14)
Now let us work out the capital gain as per the formula given in para 1 above.
Sale proceeds = Rs. 20,00,000
Indexed cost of acquisition = Rs. 21,91,000
Therefore, there is capital loss and there is no capital gain at all in your case.
