Civil Procedure Code (CPC)

Rate of Capital Gain Tax

This query is : Resolved 

28 February 2011

My uncle purchased a Flat from DDA (Delhi) in June1984 at a cost of Rs. 1.5 Lakhs. He sold the flate in July, 1984 at a total cost of Rs. 32.00 Lakhs. My querries are :
(i) What is the formula for calculating Capital Gain Tax ?
(ii) How Much Capital Gain is due to be paid ?
(iii) By when it is to be paid ?
(iv) A new property is intended to be purchased and it has not been purchased as yet. By when the new property should be purchased to avoid Capital Gains ?
(v)Is there any requirement to keep the money received in a particular Bank or in the shape of some specified Securities /Bonds, till new property is purchased ?
Thanks for advice

Guest (Expert)
01 March 2011

Are you sure, your query is correct when you say, "sold the flat in July, 1984", i.e., with a profit of 30.5 Lakhs by spending merely 1.5 Lakhs within one month of the same year of purchase?

If so, I wonder, if your uncle has not yet settled the Capital Gain Tax or not purchased another property. So, please recheck about the correctness of your query.

PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi-110089
Mobile: 09968076381

RS Dudani (Querist)
01 March 2011

Sir, Thanks for correcting me. The flat has been sold in July 2010 and not July 1984. A mistake committed by me.
Thanks for an early advice.
RS Dudani

preet (Expert)
02 March 2011

Calculation is made o the basis of capital index cost. (CIC)

According to CIC 1984-85-125

Index costing:-150000*711/125=853200

Capital gain=3200000-853200=2346800
Rate of capital gain tax 20%=469360/-

If assessee invests Rs.2346800 in other asset then there is no tax liability on assessee.
This amount is not needed to retain in any shape.

Tax is paid on the same year, when the return is field.

soumitra basu (Expert)
04 March 2011

If your uncle wants to save capital gain tax, he has to do the following:
1. Purchase another residential property by spending Rs. 32.00 Lacs within 2 years or construct a Residential Unit within 3 years.
2. If he cannot invest the aforesaid sum within July/October, 2011, then he has to invest the same in any nationalised bank under capital gain savings/fixed deposit account.
3. If he do not want to invest in residential property, then also he can save tax by investing the gain of Rs. 23.47 lacs in specified bond within six months from the date of sale.

RS Dudani (Querist)
04 March 2011

Thanks, Mr Preet and Soumitro Basu. Kindly also clarify if Rs. 23.47 Lakhs is now deposited in specified Bonds, whether the tzx of Rs. 469360.00 is still to be paid, or it can be avoided.
RS Dudani

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