Tax Treatment

No advance payment received wont make any liablity on you for Income tax. The tax liability arises and is chargeable as 'Long term Capital Gain' and in this case when the final amount is received the same would be deemed to have completed in the FY 2011-12.

You will need to first calculate the LTCG by first calculating the Indexed cost of Purchase suppose you purchased the property in year 1995 for Rs 200000 then calculate the current value of the property using cost Inflation Index

Cost Inflation Index

Subtract the Indexed cost from the sale proceeds that would give you the Capital Gain....there are some investments if you invest in those there will be no capital Gain tax that would be payable by you.

For example, if a property purchased in 1991-92 for Rs 20 lakh were to be sold  in A.Y. 2009 -10 for Rs 80 lakh, indexed cost = (582/199) x 20 = Rs 58.49 lakh. And the long-term capital gains would be Rs 21.51, that is Rs 80 lakh minus Rs 58.49 lakh.

Thank you very much sir for your explanation,

That property belongs to my grandfather & that property transferred to my Mother’s name in 1986,

Invested the 75% of the received amount in buying a new residential flat and 20% invested as interior development  of the flat, remaining amount still with us,

For Example. Property Value at 1986 .Rs. 600

Property value at 2011- 5000000.00 (fifty lakh)

Invested 75% in New flat i.e. Rs. 3750000.00

Interior development is 20% e.i. Rs. 1000000.00

Balance with us. e.i Rs.250000.00

Please help me to calculate the tax liabilities ob above amount  

 Thank in advance 

Understand with below example:

Suppose you purchased for Rs 600 so its current value would be 600X 711/133= Rs 3,207 and you sold this for Rs 50,00,000 so your capital Gain is 50,00,000-3,207= 49,96,793.

I dont know the level of Interior development that you have done but if it falls under some construction than it would be eligible for deduction so the taxable part that remains should be 49,96,793-37,50,000-10,00,000=2,46,793. I think it would not have a value of Rs 600 so if you calculate as per the exact value you would not have any tax liability but if still there is than invest before 31st Mar 2012 approved investments.

Thank you very much sir,

One more doubt I have, You have calculated the value according to the Indexation,

600X 711/133= Rs 3,207

As I understand 600 are the value of property and 133 is the Index rate of 85-86 what is 711, is this the current index cost inflation.

Corrects me sir if I’m wrong. what is the furmula to calculate indextion (only for my knowledge sir) 

Thnx 

Yes the cost Inflation Index for 2010-11 is 711. The table I pasted above did not capture the subsequent years. you need to multiply the purchase cost with the cost Inflation Index of the year in which property is sold and divide by the cost Inflation Index of the year in which the property is aquired/registered. So I multiplied 600 (considering your purchase cost) by 711 (Index of the sale yr) and divide by 133 (Index of the yr you aquired the property).

So Formula is:

Purchase Value x Index of sale yr /Index of purchase year.