Capital gain tax on redeveloped flat

This query is : Resolved

Chandra Nahata (Querist)
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05 May 2018 Dear Sir,

I have query regarding capital gain tax for sale of house property. Facts of the case are as under.

Flat was inherited by me during the year 2001. Flat was acquired by my father during the year 1987. Cost of the same was 2.5 lakh.

Society went for redevelopment of the Building during the year 2010. Redevelopment was completed during the year 2016 and possession of new flat was handed over on 31st May 2016. Agreement for allotment of redeveloped flat considered Market Value as 10 lakh and stamp duty has been paid by me.

Now I have sold the flat during April 2018 for 65 lakh.

Your advise is sought as under:
How the capital gain tax liability is calculated?
How much amount I need to invest in capital gain tax bond or new house to save tax liability?

Thanks a lot in advance
Chandra

Anmol Davesar

Anmol Davesar (Expert)
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05 May 2018 in 2016, you paid only stamp duty or 10lac plus stamp duty ?

second, whether there was any agreement entered in 2010when society went for redevelopment ?

Chandra Nahata

Chandra Nahata (Querist)
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06 May 2018 Paid on stamp duty. Market value considered in agreement was 10 lakh. No amount was paid to developer.
Tri-party agreement was made for redevelopment between developer, society and flat owner. This was made during the year 2010 at the beginning of redevelopment.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 May 2018 Capital Gain Tax liability is calculated as under -
A Sales Consideration xxxxxxx
B Less: Expenses of Sale -Brokerage etc. xxxxx

C.Net Sales Consideration (A-B) xxxxxxx
Less:
D : Indexed cost of Acquisition -
E: Indexed cost of Improvements :
F LONG TERM CaPITAL GAINS = C-(D+E)
.
In your case D= Fair market value as on 01.04.2001.
E= amount actually paid/contributed by you for the redevelopment and stamp duty.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 May 2018 You have to make total investment in new house or/and capital gain bonds equivalent to F i.e. LONG TERM CAPITAL GAINS.

Chandra Nahata

Chandra Nahata (Querist)
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08 May 2018 Thanks Paras ji,
Have one query. How to ascertain fair value as on 1/4/2001. This case pertains to Mumbai. Is it ready reckoner rate? or rate published by builder's association can be taken?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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08 May 2018 The circle rate can be known from the Registrar's office or from the Advocates engaed in property registration work. However, the most authentic way is to get the Valuation Report from an Approved Valuer.

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