Capital gains
This query is : Resolved
13 August 2009
Hi.. all,
Friend one of my client's father bought one house property in 1955, As per his father's will and he become the owner during 1996 now he sold half of the property during privious financial year at a cost of 35 lacs(cost of acq in 1955 Rs 12000). pls suggest the best tax saving alternatives.
thanks.
N.B.
Friend one of my client's father bought one house property in 1955, As per his father's will and he become the owner during 1996 now he sold half of the property during privious financial year at a cost of 35 lacs(cost of acq in 1955 Rs 12000). pls suggest the best tax saving alternatives.
thanks.
N.B.
CA Nitish Jain
(Expert)
13 August 2009
as per section 49(1), period of previous owner will be counted while counting the period of holding. also, with reference to explanation to section 42(2A), cost of previous owner will be the cost to the assessee.
you can take the fair market value as on 01.04.1981 as base value in 1996 and calculate the indexed cost in the year of sale based on the indexation of 1996. also, you can add the indexed cost of improvements to the house property (if any).
the difference between the above calculated cost and the sale value will be the Long Term Capital Gain for the assessee and will be accordingly taxable.
You can reduce your tax liability by taking a higher value of the property as on 01.04.1981.
if you dont get a value as on 01.04.1981, you will have to take Rs. 12000/- as the value in 1996. which will not help you to reduce your liability.
you can take the fair market value as on 01.04.1981 as base value in 1996 and calculate the indexed cost in the year of sale based on the indexation of 1996. also, you can add the indexed cost of improvements to the house property (if any).
the difference between the above calculated cost and the sale value will be the Long Term Capital Gain for the assessee and will be accordingly taxable.
You can reduce your tax liability by taking a higher value of the property as on 01.04.1981.
if you dont get a value as on 01.04.1981, you will have to take Rs. 12000/- as the value in 1996. which will not help you to reduce your liability.
Ratan Sharma
(Expert)
14 August 2009
Agreed with expert except indexation in such case will be applicable from the year 1996 you can not opt for fmv as on 1.4.1981.
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