Capital gain
Vishal.Sri
(Querist) 23 February 2013
This query is : Resolved
I bought a vacant land in 1965 for Rs.1500/-
I constructed a house in 1970 (for Rs.5000/-)
Now, I want to sell it for a value of Rs.35,00,000/-
Can I get Capital Gain tax?
If so, what is the amount?
Anirudh
(Expert) 24 February 2013
Capital Gain = Sale price minus cost of acquisition.
To off-set the cost of inflation, the benefit of index was granted from the year 1981 (treating 1981 as the 100 point basis point). In other words, the benefit of indexation was available only from the year 1981.
The index for the year 2012-13 is 852.
Therefore, keeping in view the cost of acquisition+cost of improvement (Rs. 1500+ Rs. 5000) the total cost of the asset as on 1.4.1981 = 6500.
Applying the indexation, the same would work out to Rs. 55,380 as shown below:
6500 x 852 /100 = 55380/-
Thus the capital gain in your case is Rs. 3500000-55380= Rs. 3444620/-
This being long term Capital gain, LTCG Tax would be 20% i.e. Rs.34,44,620 x 20% = Rs.6,88,924/-
Vishal.Sri
(Querist) 24 February 2013
Thanks for reply.
Suppose I gift it to my son now in 2013.
Then he sells it for Rs.35 Lacs in the same year 2013.
In this case, what will be the consequential implications,
Please explain.
Thanks in advance.
Anirudh
(Expert) 24 February 2013
His cost of acquisition will be NIL as he got it free.
Then he has to pay the capital gains on the whole Rs. 35 lakhs.
Vishal.Sri
(Querist) 24 February 2013
Thank you for such a quick reply
Anirudh
(Expert) 24 February 2013
Sorry. I omitted to add one more think. Since your son will be getting the Gift now and will be disposing of the property within three years, he will not be eligible for Long term Capital Gain tax. Rather it will be short term capital gain tax and he has to pay normal slab rate tax.
Further, you have to pay stamp duty on the the value of the property (as applicable in your State) when you make GIFT of the immovable property in favour of your son.
prabhakar singh
(Expert) 24 February 2013
BETTER SALE AS OWNER INSTEAD OF GIFTING IT TO SON AND THEN CAUSING IT TO BE SOLD WITHIN THREE YEARS BY HIM.
C. P. CHUGH
(Expert) 24 February 2013
With Due regards to Mr Anirudh, Cost of acqusition in this case shall be subject to section 49 of the Act. which shall be the cost of previous owner as indexed and period of holding shall also include the period held by the previous owner. In the circumstances the Long Term Capital Gain shall be applicable and since the property was acquired and constructed prior to 01-01-1981 the cost as on 01-04-1981 has to be determined via Valuation Report and then indexed accordingly. Gift to relatives as specified under section 40 does not attract any tax liability, however stamp duty for registration of gift deed is to be borne, which is nominal and would be applicable as per state laws.
Thanks and regards
Vishal.Sri
(Querist) 24 February 2013
Now, I am going to my first question.
What will be my capital gain and its tax?
The question is still NOT answered. (After going thru the advice by Mr.Expert C.P.Chugh.
Anirudh
(Expert) 24 February 2013
Thanks Mr. Chugh for correcting me. I stand corrected. I missed that point. The value as on 1.4.1981 has to be first ascertained by getting the valuation done. Thereafter the indexation has to be applied.
Mr. Vishal, the exact quantum of capital gain cannot be worked now, unless the valuation of the property as on 1.4.1981 is first ascertained.
sathish
(Expert) 25 February 2013
I agree with Mr. Chugh's Opinion. Any property acquired prior to 1.04.1981 should be revalued as per the valuation as on 01.04.1981 and considered as cost of acquisition for indexation.
With regards to holding period, in the case of gift, the period held by the previous owner should also be considered and the cost of the previous owner shall be taken as cost of acquisition for indexation.
DILIP KUMAR AAGARWAL
(Expert) 26 February 2013
YOU CAN TAKE THE ADVANTAGE OF VALAUTAION OF UR PROPERTY AS ON 01.04.1981. SUPPOSE VALAUATION OF UR PROPERTY AS ON 01.04.181 IS RS.100000/- THEN AS PER INDEX COST VALUE OF YOUR PROPERT WILL BE TREATED AS 785000/- AND CAPITAL GAIN WILL BE (35,00,000/- MINUS 785000/- WILL BE 27,15,000/-. SINCE THIS IS LONG TERM CAPITAL ASSEST SO YOU HAVE TO PAY 20% INCOME TAX ON 27,15,000/- WHICH COMES TO RS.5,34,000/-. YOU CAN SAVE AMOUNT IF YOU DO THE INCOME TAX PLANNING. SO PLASE CONSULT YOU TAX CONSULTANT.
Raj Kumar Makkad
(Expert) 01 March 2013
Nothing to add more as almost all aspects of the query have already been discussed.
DILIP KUMAR AAGARWAL
(Expert) 01 March 2013
you can make consultation with my consultancy firm.Mobile 9474380665
C. P. CHUGH
(Expert) 01 March 2013
With Due regards to MR Dilip Aagarwal, Is it fair to solicit business in such manner.
Thanks and regards
