Base value for ltcg

Tax queries 152 views 5 replies

deepa

Tax Payer Housewife

4 Points Joined July 2018

Dear Experts,

How does one calculate the base value of an old property for LTCG?

The value given by a certified valuation expert does not take into account the premium for the property.

As per current estimated market value vs actual sale price - the premium is 150%.

Can I apply this same premium on the 2001 property value, to arrive at a fair base price?

Example:

Property purchased in 1980 for 20,000

Property sold in 2018 for 75,00,000.

But estimated value of the property in 2018 as per ready reckoner is only 50,00,000.

Estimated Value of property in 2001 as per ready reckoner is 11,47,000.

Should the LTCG be calculated on 11,47,000? Or can I apply the current premium over ready reackoner value, and assume it to be 17,20,500.

Request clarity on this from an expert.

Thank you.

Replies (5)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

210471 Points Joined July 2016

"can I apply the current premium over ready reackoner value, and assume it to be 17,20,500."

No. The CG calculation on such assumption would not be allowed, unless Valuation Expert includes any such premium in his FMV report ...

rama krishnan

12244 Points Joined May 2017

find the value of property as on 1.4.2001 from stamp duty value authority then apply cii value and compute indexed cost of acquisition

Nitesh bind

Student CA Final

12692 Points Joined October 2012

You should take help of a registered property valuer, rather than arbitrarily deciding the FMV of the property. “Assumptions of any type for consideration of value shall not be entertained by the income tax department. In case of any enquiry, the department will consider the value stated in the valuation report from a registered valuer.

Further if the AO consider that value arrived by Registered Valuer is not the Correct FMV they may automatically Refer to the Valuation Officer u/s 55A for the Valuation of Property.

Thanks.

deepa

Tax Payer Housewife

4 Points Joined July 2018

I have got it assessed by the Registered Valuer, and his report states that "Market value of land was always 25 to 50 % more than the guide line value during those period"

But he has not taken this into account in the final valuation. So can I apply this 25-50% premium for taxation purpose? Otherwise the LTCG tax is absurdly high.

Nitesh bind

Student CA Final

12692 Points Joined October 2012

Why Your valuer is not taking such value? there must be any logic behind that you can ask that.
There might be an Alternative that you file the return on basis of such value as you are considering correct (disregarding the value derived by Your Valuer) and if AO is satisfied with such value he'll take value as okay. If not satisfied and disregard the value derived by him you can prove him and request him to refer to Department Valuation officer u/s 55A.