Capital gain
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
22 April 2012
why we do indexation at the time of calculating long term capital gain ?
22 April 2012
Capital gain arises when the net sale consideration of a capital asset is more than the cost. Since “cost of acquisition” is historical, indexation i.e, the concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost. Consequently, a lower amount of capital gains gets to be taxed than if historical cost had been considered in the computations.
So indexation is a benefit given to taxpayer to account for impact of inflation.
So indexation is a benefit given to taxpayer to account for impact of inflation.
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23 April 2012
++++++++++Indexation is done as when you invest what was the value of money and when you sale what is the value of money for giving compensation this is done.
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