Long term capital gains on sale of residential land plot

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This discussion clarifies capital gains tax on the sale of residential land plots. It explains that periodic property taxes generally cannot be included for indexation purposes. However, capital gains can be invested in a capital gains account before the IT return due date if claiming exemption under Section 54. Permissible expenses for adjustment against capital gains include acquisition costs (stamp duty, brokerage) and legitimate maintenance costs like fencing, though travel expenses for the transfer are not allowed. There's no specific cap on these deductible expenses, provided proper documentation is available.

mahan

mahan (Querist)
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16 March 2023 Pl clarify
1.whether cost of purchase/ development for indexation can include periodic property taxes paid till disposal.
2. Whether only capital gains can be invested in capital gains account with bank before due date for filing IT return by the seller individual.( i.e, before 31st July)

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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16 March 2023 1. No.
2. Yes, if exemption claimed u/s. 54 of IT act.

mahan

mahan (Querist)
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24 March 2023 what are the permissible expenditure that can be adjusted against capital gains?
whether travel expenses for transfer can be adjusted against capital gains?
also, indicate any cap for any / all permissibe expenditure that can be adjusted against capital gains?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 March 2023 1.Any cost directly related to for acquisition of the asset like stamp duty registration charges, brokerage etc. & any legitimate expenses to maintained it in the state like fencing, security charges etc. can be claimed as cost of improvement while arriving at the capital gains.
2. Not allowed.
3. No cap, but proper evidences should be available.

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