Capital Gain on Sale of Commercial Property

Ajit Singh Dua (3 Points)

29 November 2021  

Hello CA Club, please guide :-

My father 80 years has recently sold an old and long-held commercial property for Rs 70 Lacs . The purchase cost was Rs 95,000 in year 1986 . Here is our broad and layman understanding,

The publicly available indexation chart suggests indexing of approx 9x times from 1986 to 2021, so let's say Indexed cost of Rs 9 Lacs . Balance 70-9=61 Lacs is capital gain . Father intends to deposit 50 Lacs in 54EC capital gain bonds @ 5% for 5 years lock-in . And on remaining 11 Lacs, he will pay long-term capital gain tax @ 20% .

Please guide if our broad understanding is correct , or are we making some omission/ mistake. My 2 main queries are :-

i) Is indexation calculation same for Commercial or Residential property irrespective?

ii) Can 54EC bonds application be made for Sale of Commercial property also, or is it only for Residential?

Thank you very much. Expecting your valuable feedback and comments