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Capital gain
It would be a long term capital gain, as the cost of acquisition for the previous owner would be the same for the one who inherited the property. the calculation of LTCg is as given below:
| Sale consideration | 30000000 |
| Less: Indexed Cost of Acquisition | |
| Less: Indexed Cost of improvements | -5520394 |
| Long Term Capital Gina | 24479606 |
You have not given the Cost of acquisiont originally acquired in 1960. That will also get reduced from the above. As the property was acquired in 1960, therefore the fair value as on Apr81 or the COA in 1960 whihcever is hihg would be eligible for deduction by indexation.
Capital Gain should be long term capital gain.
Actual cost shoud be taken as Fair Market Valve as on 01.04.1981
Cost incurred on demolition and construction shall be treated as cost of improvement because value of property increased.
it would be LTCG only as the property is deemed to be held by the legal heir including the period of the previous owner.
Hence the demolition of old bldg and re-construction forms mere cost of improvements.
Also Original cost of Rs. 50,000/- would be irrelevant as you have to take the FMV as on 01.04.1981 to calculate the indexed cost of acquisition.
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