Capital gain

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RAMACHANDRAN (Querist)
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06 May 2014 I have purchased a land with building @ Rs.3 lakhs and stamp duty paid Rs..35K during 1992.(in individual name). I have spent 1.98 crores for improvement and paid 25 lkahs interest for loan taken for improvements.

i have an offer for 8 crores and want to dispose now. (land value Rs.5 Crores and bulidng is 3 crores)

please advise how much capital gain i need to pay.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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06 May 2014 First of all you need to apportion purchase cost between land and the building.

Assuming that whatever you paid was only for the land, index Rs 3.35 lakhs from 1992 to 2014 t arrive at indexed cost of the land. Difference between rs 5 cr and the indexed cost is your capital gains from land

for building: Index Rs 1.98 cr from the year in which it was incurred to 2014. same applies to interest cost. subtract the same from Rs 3 cr to arrive at capital gains from building. it could result in a loss.

The above computation has been advised from claiming exemption from capital gains by reinvesting the consideration under 54, 54f, 54ec etc

If you wish not to reinvest and simply pay capital gains tax, simply index the costs incurred from the year of incurring the cost to 2014. subtract the indexed costs from the considetaion (Rs 8 cr).

You need to pay net 20% tax on the gains.

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