LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Capital gain on my property sale

Ignesius (Student) (62 Points)

20 May 2023

Dear Experts

Can anyone give the correct way how capital gain amount is calculated on a property sale:-

An example case :-

I bought a property for 1 lac for each cent in the year 2015.
Selling the property in this year 2013
Tamil Nadu government guidance value for one cent is Rs. 75000, stamp duty 9%
My selling amount (as per market rate ) is , Rs.5 lacs for each cent
Stamp duty will be paid by the buying person only on the Government guidance value of Rs. 75000
The buying person is paying , Rs.5 lacs for each cent though Bank (no cash)
What would be my capital gain ?
What should I do to make sure that the amount of the sale (i.e.Rs.5 lacs for each cent) is fully capital gain ?

Thanks for the time and attention – Ignesius

Reply
Follow
Share

10 Replies

Brahmananda Reddy M (CA) (36 Points)
Replied 21 May 2023

Hello,

Capital Gains Tax will be calculated as per provisions of Income Tax Act, 1961. Capital Gains tax needs to be paid on the profit earned by you from the sale transaction.

Based on the above facts and figures, The following points may be noted

1. The Sale Consideration (Market rate or registered rate, which ever is higher), so in this case - Rs. 5 Lacs

2. From the above Rs.5 lacs Sale consideration, you are allowed to deduct the following expenses before arriving profit/loss from this transaction

(A) Cost of Acquisition (Indexation applies).

(B) Registration cost paid by you when you purchased the property (Indexation applies).

(C) Cost of Improvement (Indexation applies) { If you invested any amount on that property as improvement for original purchased property shape, you can claim that amounts as deduction).

(D) Any Brokerage fees paid to broker for sale of this property.

After the above deductions, if any profit earned on that tax has to be paid as per rates specified in Income Tax Act, 1961.

If any further queries, you can reach out to - cabrahmananda @ outlook.com

sabyasachi mukherjee (26047 Points)
Replied 21 May 2023

Pls post realistic figures.

Shloka Madhavan (Teacher) (301 Points)
Replied 21 May 2023

What do you mean by stamp duty paid as per guidance value? & sell amount totally received in bank!

1 Like

Ignesius (Student) (62 Points)
Replied 21 May 2023

Dear Expert

This is true picture. The government guidance value is Rs.75000/- and market value is Rs. 5 lacs/ for one cent-. It is in a village in Tamil Nadu. The stamp duty ( including registration) is 9% (as per the writer). The buyer is insisting that the sale deed must be registered using the government guidance value of Rs.75000/- and he will pay the stamp duty and registration charges on that value only. Remaining amount ( 5 lacs – 75000) will be paid to me through bank transfer. My real question how does the amount (5 lacs – 75000) get treated. What should be done to get the amount (5 lacs – 75000) also get considered for capital gain.

Thanks for the time and attention – Ignesius

Ignesius (Student) (62 Points)
Replied 21 May 2023

Dear Expert

Thanks for the time and attention – Ignesius

sabyasachi mukherjee (26047 Points)
Replied 21 May 2023

Indexation will be applied. sale value less indexed value of consideration.

Ignesius (Student) (62 Points)
Replied 21 May 2023

Dear Sabyasachi

How does the amount (5 lacs – 75000) get treated. What should be done to get the amount (5 lacs – 75000) also get considered for capital gain indexation.

Thanks for the time and attention – Ignesius

Naveed Munir (19 Points)
Replied 25 May 2023

To calculate the capital gain on the sale of a property, you need to follow these steps:

Determine the Cost Basis: This includes the original purchase price of the property, along with any additional costs incurred for improvements, such as renovations, additions, or major repairs. Add these costs together to calculate the adjusted cost basis.
Determine the Selling Price: This is the amount you received from selling the property.
Calculate the Capital Gain: Subtract the adjusted cost basis from the selling price. If the selling price is higher than the adjusted cost basis, you have a capital gain. If the adjusted cost basis is higher, you may have a capital loss.
Consider Exemptions and Deductions: Check if you qualify for any exemptions or deductions that can reduce your capital gains tax liability. For example, in some countries, there may be exemptions for primary residences or certain types of properties held for a specific period.
Determine the Tax Rate: The tax rate on capital gains depends on various factors, including your country of residence and the duration of property ownership. Consult the tax regulations in your specific jurisdiction or seek advice from a tax hydraulic steering system professional to determine the applicable tax rate.

Vinoo Chavda (student) (42 Points)
Replied 26 May 2023

You cannot register the property at rate different than the higher amount received from purchaser. Both purchaser & seller will be under litigation.

2 Like

Ignesius (Student) (62 Points)
Replied 26 May 2023

Dear Vinoo

Every sale in India happens with such a difference !. It is a open secret. Where else our most of our black money get created ?. It is purposely kept that way forcing people to create black money.

Thanks & Regards - Ignesius