Capital gain

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R VAIDYANATHAN (Querist)
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30 November 2011 i was purchase a house on02.03.1988 of Rs57000 after that i have constructed ist floor 2700sqft now i want sale the property to Rs175.00lakhs how can i calculate capital gain pl clarify and any other working to reduce capital gain

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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30 November 2011 Income tax is not levied on Square feet
basis. It depends upon the fact that how much you have spent and what you have got.
.
The Costof purchase as well as subsequent cost of improvement has to be indexed to find out the inflation based indexed cost of the flat.
.
This enhanced value is subtracted from the sales consideration. This excess is Capital Gain.
.
You can purchase another residential house by investing the capital gains amount or more. You will not require to pay Capital gains Tax.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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30 November 2011 The capital gain will be calculated by reducing the indexed cost of acquisition from the sale price.

Sale Price
Less: Indexed Cost of acquisition
57,000*CII of FY 12-13/CII of FY 87-88

Less: Indexed Cost of Imrovement
Cost of construction of 1st floor*CII of FY 12-12/CII of year of construction.

You can avail exemption under Section 54 of the Income Tax Act by investing the sale proceeds in purchasing or constructing a new house.

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