Calculation of ltcg-sale of property

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Dilip Khosla

consultant

28 Points Posted on 20 January 2019

I have a property in Gurgaon, which was purchased in FY 1995-96. I paid an amount of around 44 lacs.

I now wish to dispose of the property and expect to receive about Rs 2.5 cr. As per my knowledge, the LTCG is to calculated as under

Sale price - indexed value of purchase price on date of sale (say FY 2019-20)

ie 2.5 cr - ( 44 lac x ( index yr 2019 - index yr 1995)

However, I have been informed that for property in Gurgaon, I need to have the property assessed to determine its value in FY 2001 and thereafter calculate its present value by multiplying the assessed value by (index in 2019-20 - index in 2001-02)

I am unable to understand the need to have the property value assessed as above since I have exact details of purchase cost.

Could someone kindly clarify and explain how I have to calculate the LTCG.

Thanks

Replies (4)

Giridhar S Karandikar

Team Lead

7558 Points Posted on 20 January 2019

you will need to arrive at the market value of the property as on Apr 2001 from a valuation officer. then the market value as on Apr 2001 and the cost whichever is higher is to be taken as cost of acquisition and accordingly indexed and capital gains to be calculated

MOHAMMED IMRAN

1020 Points Posted on 20 January 2019

where the capital asset become the property of the assessee before 1-4-2001 then, cost of acquisition means the cost of acquisition of the asset to the assessee OR the fair market value of the asset on 1-4-2001 at the option of the assessee (but it is advisable, you can take which ever is higher. so, it will reduce your tax liability )

LTCG =
gross sales consideration
less
expenditure incurred wholly and exclusively for the purpose of such transfer
less
indexed cost of acquisition
less
indexed cost of improvement