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Long term capital gains

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(Querist)
18 April 2017 1. For an apartment bought from a builder with payment in instalments, when does the apartment become a capital asset. I have been told it becomes one from the date of issue of the allotment letter by the builder, and the period for it to become a long term capital asset is calculated from this date.
Is this correct?

2. If so, how is the indexed cost calculated? The instalments are paid over a long period of time.
Please advise in detail
Thank you
R Chadha
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ND

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ND (Expert)
18 April 2017 Normally when an apartment is booked with a builder, then it remains as advance only till the property is fully constructed. Once it has been completed and is fit for possession then it becomes a capital asset. Before that it remains as advance.
You can show the period of holding from the date of allotment but this is debatable and subject to litigation.
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R Chadha

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R Chadha (Querist)
18 April 2017 Thank you for the prompt reply. Are you aware of any CBDT circulars / directives on the subject?
R Chadha
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
19 April 2017 Yes it's​correct to calculate from date of allotment. Does not matter for instalment payment index calculate from date of allotment.
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R Chadha

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R Chadha (Querist)
19 April 2017 Thank you Mr Seetharaman
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