Capital gain on sale of residential property

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Nalini S (Querist)
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25 December 2011 A flat purchased during April 1997 for Rs.3,01,000/- and have sold during Dec. 2012 for Rs.10,50,000/-. Kindly clarify on the following points:

amount of Capital gains
whether it could be deposited to avail tax exemption. If so, where it is to be deposited and what should be the duration of investment
Is there any prescribed time limit

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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27 December 2011 Long term capital gain will arise on the transfer of such flat.

You have mentioned the date of sale as December, 2012. Is it actually 2012 or 2011?

Capital gain will be calculated as under:

Sale Price
Less: Indexed Cost of acquisition
Capital Gain

Indexed cost of acquisition:

Cost of acquistion*CII of year of sale/CII of year of purchase.

CII = Cost Inflation Index

Further, you can claim exemption under Section 54 of the Income Tax Act, by doing the following:

Purchase a residential house within a period of one year before or two years after the date on which the transfer took place,
or constructed a residential house within a period of three years after that date.

If you are unable to invest the money before the due date of filing the return, then deposit the same in a Capital Gain Scheme Account with a nationalised bank.