Capital gain tax

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Querist : Anonymous

Querist : Anonymous (Querist)

17 May 2012 Mr.A booked the flat in May 2006. The total cost of the flat is Rs.40,00,000. He paid advance of Rs.4,00,000 at the time of booking. He took the loan from the bank for the balance amount and paid EMI of Rs.30 lakhs during 2008 and Rs.10 lakhs during 2009. Thus, he paid the full amount including interest to the bank during 2009. He got the possession of flat in 2011. He sold the flat in 2012 for Rs.80 lakhs and purchased another flat at the cost of Rs.1.5 crore.

1. Whether the sale of flat during 2012 is considered as long term or short term capital gain?
2. If it is considered as Long term capital gain, how to calculate cost of indexation in this case

Thanks in advance. Immediate response will help me to sort out the issue.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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17 May 2012 1. The date of acquisition shall be the date of obtaining possession.

2. Accordingly the gain will be short term capital gain.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 May 2012 Thanks for quick response.

However, just for my understanding, in this case how the cost of indexation is calculated , if the flat is sold in the year 2015 (falls under the category of long term capital gain).

Querist : Anonymous

Querist : Anonymous (Querist)

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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17 May 2012 As I said, the date of acquisition shall be the date of obtaining possession. The Cost Inflation Index (CII) for the year of acquisition shall be taken.

The advance paid will NOT be indexed separately. The total cost including advance will be indexed by using the CII of the year of possession.

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