Capital gains tax

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Querist : Anonymous

Querist : Anonymous (Querist)

31 January 2013 hello !
Suppose my grandfather purchased 14 kattha plot of urban orchard land in 1973 @ Rs 1000/-(ie., total cost of acquisition-Rs 14,000/-) in my name when I was only 7 years old under guardianship of my father.My grandfather died in 1999 and my father expired in 2009 .I sold the two katthas land in 2010-11 @ Rs 10 lac/kattha(total selling price-Rs 20,00000/-).What will be the capital gains and can the capital gains be reinvested in purchasing agricultural land for capital gains exemption?Please note that at the time of purchase of land it was not within the municipal limits of the city but at the time of sale it falls within the municipal limits.

kunal

kunal (Expert)

31 January 2013 yes capital gain is liable to tax @20%.

capital gain = sale consideration - indexed cost of acquisition

you can not claim capital gain exemption by reinvesting capital gain in purchase of agricultural land ( u/s 54B) because asset transferred is not a agricultural land..

you have only 2 ways to get exemption of capital gain
1) invest in RECI, NAHI BOND (u/s 54ec)
2) invest in residential house property (u/s 54f)

Querist : Anonymous

Querist : Anonymous (Querist)

31 January 2013 Sir
What will be the cost of acquisition in my case?The land was purchased in the year 1973 whereas indexation starts fron the year 1980-81.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

31 January 2013 1. Orchard Land contains fruit trees and
certain agriculture operations are required for getting fruits from trees.
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2. The land can be treated as an Agriculture Land. (Decide yourself from the facts)
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3. Valuation of the land as on 1.4.1981 has to be made by an approved valuer as the proportion of the same will be treated as cost of acquisition
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4. In case it is Agriculture land, you have to invest the capital gains amount for purchasing a new Agriculture land.
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5. Investment suggested by Mr. Kunal can also be considered.
.

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