Regarding Property Valuation for capital gains purpose
This query is : Resolved
11 May 2026
Respected colleagues,
I would like to seek clarification regarding the determination of the cost of acquisition of a property for capital gains purposes.
The property was originally purchased in 1997 as agricultural land and was subsequently converted into residential plot after obtaining CLU approval. The property was sold in October 2025.
In this regard, I have the following queries:
1. How should the cost of acquisition as on 01.04.2001 be determined?
Whether the same should be calculated based on a valuation report obtained from a Registered Valuer or through any other suitable method as per the provisions of the Income Tax Act.
2. If a valuation report from a Registered Valuer is obtained, whether the report should reflect:
the Fair Market Value (FMV) of the property as on 01.04.2001, or (Because FMV is always higher)
the Circle Rate/Collector Rate prevailing on that date.
3. Since the property was agricultural land as on 01.04.2001 and was converted into residential plot at a later stage, whether the valuation report should be prepared considering the nature of land as:
Agricultural Land, or
Residential Plot.
4. As the valuation report will be prepared during FY 2026-27 for a property sold in October 2025, kindly clarify whether the provisions of the Income Tax Act, 1961 or the Income Tax Act, 2025 would be applicable for determining the valuation and computation of capital gains.
You are requested to kindly suggest the most appropriate and legally acceptable approach so that we may proceed accordingly.
Regards
I would like to seek clarification regarding the determination of the cost of acquisition of a property for capital gains purposes.
The property was originally purchased in 1997 as agricultural land and was subsequently converted into residential plot after obtaining CLU approval. The property was sold in October 2025.
In this regard, I have the following queries:
1. How should the cost of acquisition as on 01.04.2001 be determined?
Whether the same should be calculated based on a valuation report obtained from a Registered Valuer or through any other suitable method as per the provisions of the Income Tax Act.
2. If a valuation report from a Registered Valuer is obtained, whether the report should reflect:
the Fair Market Value (FMV) of the property as on 01.04.2001, or (Because FMV is always higher)
the Circle Rate/Collector Rate prevailing on that date.
3. Since the property was agricultural land as on 01.04.2001 and was converted into residential plot at a later stage, whether the valuation report should be prepared considering the nature of land as:
Agricultural Land, or
Residential Plot.
4. As the valuation report will be prepared during FY 2026-27 for a property sold in October 2025, kindly clarify whether the provisions of the Income Tax Act, 1961 or the Income Tax Act, 2025 would be applicable for determining the valuation and computation of capital gains.
You are requested to kindly suggest the most appropriate and legally acceptable approach so that we may proceed accordingly.
Regards
12 May 2026
1. Either valuation report from registered valuer or circle rate of the area as on 1st April, 2001 as recorded with Sub registrar office.
2. Circle rate
3. Agricultural land.
4. Income tax act, 2025.
2. Circle rate
3. Agricultural land.
4. Income tax act, 2025.
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