Capital gain on sale of property

Capital gain tax on the property is levied specifically on the monetary profit from the sale or transfer of residential properties or lands by an individual who does not consider it a profession or such income is not his/her main domain of earning.

What is your query?

We are family of 3 brothers and mother.
My father (expired in February 2017) purchased one flat in June 2016 and after death of father , 3 brothers gifted their portion to mother via gift deed and flat got transferred in my mothers name.

My mother , 58 yrs , has sold a society flat in December 2022 for 35 lacs. Purchase Price was 20 lacs , stamp duty 1.4 Lacs , registration fees 10K. Long term capital gain is coming as Rs. 804356 (35 lacs - 21.50 lacs/264*331).

- the calculation of capital gain is correct ?

- we want to save capital gain tax , basic exemption limit for FY 2022-23 is Rs. 2.5 Lakh , balance Rs 554356 (804356 - 250000) if we invest in capital gain bond , the we will be able to save capital gain tax of 20% ?

- does capital gain is applicable in this case as flat got transferred in my mother name from father ?

It is a CA who can assist you.

ok sir , I will take assistance from CA.

The computation of long term capital gains tax is  by fapplying the forumula mentioned below:

Long-term capital gain = Final Sale Price – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where: Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Example: Manya bought a house in July 2004 for Rs.50 lakh, and the full value of consideration received in FY 2016-17 is Rs.1.8 crore. 
Capital asset type: Since this property has been held for over 3 years, this would be a long-term capital asset.

Cost of acquisition: The cost price is adjusted for inflation and indexed cost of acquisition is taken. Using the indexed cost of acquisition formula, the adjusted cost of the house is Rs 1.17 crore. (Refer CII here for the calculations)

Capital gain: Hence, the net capital gain is Rs 63, 00,000.

Tax: Long-term capital gains on sale of house property are taxed at 20%. For a net capital gain of Rs 63, 00,000, the total tax outgo will be Rs.12,97,800.

This is a significant amount of money to be paid out in taxes. This can be lowered by taking benefit of exemptions provided by the Income Tax Act on capital gains when profit from the sale is reinvested into buying another asset.

Section 54: Exemption on Sale of House Property on Purchase of Another House Property