Tax on sale of flat

tax in calculated on net Cap. asset i.e sale proceed minus indexation of cost of property.

if u purchase a residential property from sale consideration of ur earlier reidential property  within the prescribe time  then Cap. gain exempt but u have to file IT return .

I purchased a flat in 2003 for Rs. 20 lakhs. Also, I took a loan to repay the amount. 

I cleared the loan along with Interest in March 2012. 

1. If I sell the Flat today, how will I be taxed for the same?? (assuming the current price is around Rs. 65 lakhs.)

                                                               Assessment Year: 2014-15

Status: Resident Individual;

Assumed Not a Senior Citizen; assumed having also other income exceeding Rs 2,00,000)

                                                                                                                Sale Price: Rs 65,00,000

less: (a)Cost: Rs 20 lakhs (in FY 2002-03)

              Indexed Cost: 

(CII for FY 2002-03: 447;

CII for FY 2013-14: 939.)

= 20,00,000* 939/447                                                                                            = Rs 42,01,342

(b) Cost of improvements: 'NIL' (assuming that no improvements are claimed)

                                                                              Hence, Long Term Capital Gains:Rs 22,98,658

                                                    Income tax thereon @ 20%: under S. 112(1) (a):Rs 4,59,632

Surcharge: NIL( assuming that your Total Income is  below Rs 1 crore)

                                                                                                           Edl. Cesses @ 3%:13,789

Total Tax payable on the Long Term Capital Gains from the sale of the flat: Rs 4,73,421

Note: Rebate under Section 87A - you are not eligible, as your Total Income exceeds Rs 5 lakhs.

2. If I end up paying taxes on the sale of flat, how should I plan in order to save taxes on the sale of flat? What Options do I have to save taxes?

a) As the property sold was a residential house, you can claim exemption under S.54, by investing the amount of Capital Gains, in another residential house within the specified time limit.

b) You can claim exemption under S.54EC by investing the amount of Capital Gains, in certain Bonds,as specified in the Section .

Thank you Rajagopalan sir for your prompt reply! 

Regards

While working out capital gain you may also add  to cost of flat stamp duty charges and  registration charges paid for registering  the flat in your name  and also index it  so your tax liability will also reduce accordingly 

Thanks