Capital gain due to govt. compensation

First we need to compute the cost of acquisition of the house.

Since the house was acquired by way of gift, the cost of acquisition, in terms of S.49(1),  to the assessee shall be the cost of acquisition to the previous owner.

If that house was acquired prior to 01.04.1981 then we need to find the fair market value of the property as on that date and if its more than the original cost of acquisition then the fair market value as on 01.04.1981 shall be taken as the cost of acquisition.

To determine this fair market value , you may approach to a registered valuer.

3 Lacs for each of those years will be considered as Cost of improvement and it also needs to be indexed.

Add all these values and multiply it with the percentage of area taken away by the govt. This is your costs for computing capital gain.

If you can not invest in new house and still want to claim exemption, you might want to consider claiming exemption u/s 54EC by investing in bonds of NHAI/RECL. This is to be done within 6 months from date of TRANSFER.

Let us know if you need to know anything else.

Thank you Z for your quick response. the govt. paid a lumpsum (say 10 lacs) in which they gave a break up of cost of structure + land , compensation and some amount towards delayed payment and some 2 or 3 more components, should I use the lumpsum figure as capital gain amount or only cost of structure+land + compensation

Prima facie it appears that full amount is a consideration but before I conclude that I would like to see the original documents. Its always better to keep some precautions.

You may mail it to me