Indexation Of Long Term Gain

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Dear Sir/Madam,



I bought my residential property in 1988-89 for 12.50 lakhs,which I want to sell now. Now it's value is about 1 cr. I want to know if I were to sell my flat before 31/03/2010,how to calculate indexation.O what amount I have pay tax if I were to sell this flat for 1 cr. 

 
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Advocate

Dear Modi

The Formula for computing indexed cost is (Index for the year of sale/ Index in the year of acquisition) x cost.

If the property purchased in 1988-89 for Rs 12.50 lakh were to be sold  in 2009 -10 for Rs 1.00 Crore, indexed cost = (582/161) x 12,50,000 = Rs 45.19 lakh. And the long-term capital gains would be Rs 54.81 lacs, that is Rs 1,00,00,000 minus Rs 45.19 lakh.

The LTCG tax will be 20% of Rs.54.81 Lacs, However, you have different options to invest the capital gains to save taxes. You need to contact a local Chartered Accountant who can guide you properly.

P.S: The CII for 2009-10 is not yet notified hence, the CII of 2008-09 is considered as an Example.

 
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