Capital gain and cii

1]. Yes you can calculate the CG without indexation.  however in this case you will end up in paying huge tax than would have been paid if the indexation benefit had been taken.

2]. In case of properties which were being puchased prior to April 81 when the indexes were not been available then in such case the Market Value of the property as on Apr81 or the cost of the property in 1966 shud be compared & the higher of the two can be taken as cost of acquisition.  This option is available only in case of properties whihc were being purchased prior to Arp81. Index in such a case shud be divided by 100 which is for Apr81

3]. In cae of inherited properties whihc wre being inherited after the death, in such cases the right in the property devolves on the legal heirs in equal proprotions.  So in this case you will have to first see who all are the genuine legal heirs.  Genuine legal heirs means the spouse, children of the deceased.  After that the CG arising on the sale of property would be distributed equally among all the legal heirs and exemption u/s 54 can be taken seperately.  i.e each one of them has to purchase a seperate house.  However if they take a house in their joint name then they can take exemption against one house.

@ Giridhar thanks for quick reply

I 'm interested in without indexation because property had been bought in 16k  in 1966 and sold for INR 84 lacs in 2012 so I guess here without indexation will be better.

I read one article on leading E-Paper  so link is here

https://www.thehindu.com/life-and-style/homes-and-gardens/article3504803.ece

So after reading this let me know your view

Mr goyal, the difference is nominal if you calculate Cg without indexation whihc comes to around 24000.  So you can calculate CG tax without indexation benefit also.

I will have to confirm if you could take the exemption u/s 54 if Cg is calculated without indexation.

Solution to Query 1 : As per Proviso to section 112 you can pay tax on LTCG @ 10% on LTCG without availing the benefit of 2nd Proviso to section 48 (indexation). But this option is available only in case of Securities Listed on Recognised Stock Exchange, Units & Zero Coupon Bond. The said option is not available in case of Plot/Land.

Solution to Query 2 : You have the option to take Cost Of Acquisition (COA) of the property to be either original COA or FMV as on 01.04.1981, whichever is higher. And in such case Cost Inflation Index for the base year shall be taken to be 100 i.e. CII of 1981-82.

Solution to Query 3 :- Yes they can avail the exemption provided the new property is registered in the name of legal heirs.

- Ruben Balooni

@ Giridhar

If base price of that property is on April 1981, is around 2 lacs

Then CII  for 1981-82=100

Then CII for 2012-13 = 852

CII factor = 8.52

cost of acquisition will be 2 *  8.52 = 17.04

Capital gains = 84- 17= 67

Tax @ 20 % will be around = 13.4 lacs

If we go without indexation then

@ 10 %   on 84 lacs = 8.4 lacs

Difference will be huge

Could you please explain me how did you calculate and found the difference of only 24k .

@ Saurabh Goyal : Capital Gain in your case will be taxable @ 20% after indexation. Benefit of Proviso to section 112 is not available in case of Plot/Land. It is clearly written in the article the link of which you posted.

"In connection with the article on Indexation and Capital Gains (PropertyPlus, June 2, 2012) a lot of queries have been received by us. One common query was “what if the 10 per cent Without Indexation benefit is allowed to be used in case of property sale.” We would like to clarify that the 10 per cent Without Indexation benefit is not offered for the proceeds received upon sale of property; only 20 per cent With Indexation benefit is applicable. The error seems to be in the interpretation and we regret the ambiguity in this case."

1) As per proviso of sec.112 this benefit is available on sale of shares, securities and units. Condition is STT should be paid and such sale should be through recognized Stock Exchange. Therefore this benefit is not available on Plot/Land.

2) Take COA or FMV as on 01-04-1981, whichever is higher for the purpose of calculating COA of such asset.

3) Yes all of them get such deduction

@ Ravi Kumar Mahaur : There is no condition regarding STT to be paid on sale of shares in proviso to 112. Had there been this condition then LTCG would've been exempted u/s 10(38) [in case of equity shares & units of equity oriented fund]. The only condition is that securities on transfer of which LTCG is computed must be the one which are listed in recognised stock exchange, sale & purchase can take place on & off exchange.

Agree with Ruben Balooni and benefit of Section 112 can not take on Sale of plot or land.

agreeing with you ruben yes these conditions are u/s10(38). Actually there was similar problem here regarding shares and i was writing about that but unfortunately i had written some part of it here also..