Capital Gain Tax on property sale

 capital gain tax will be attracted on sale of property

the property was purchased before 1981 so we take the fair market value of property as on 1-4-1981 as cost of acquisition.

on that price indexation will be done.

capital gain will be arrived as follows :- 

Sale price                   80 lakhs

Less- Fair market value as on 1-4-81 * Index of current year / 100 (index of 1981)

If any balance positive then it is capital gain. 

capital gain can be reduced by purchasing another house with in specified period.

yes agree with wat Manish has said ... and further for the purpose of tax planning ......

As per sec. 54, the Exemption is allowed if the assessee has purchased one or more houses within 1 years before or 2 years after the date of transfer of original house or the assessee has constructed one or more houses within three years ater the date of transfer of original house.

Exemption shall be allowed equal to the amount of investment.

The assessee should make the investment otherwise the amount shall be deposited in capital gains account scheme 1988 till the last date of filing of return of income and amount can be withdrawn subsequently for making the investment within the prescribed time period.

If any interest has been received in capital gains account scheme, it will be taxable u/h Other Sources.

Further, if any house has been purchased or constructed to avail the exemption u/s 54, the assessee shall not be allowed to sell the house within a period of three years otherwise exemption earlier allowed shall be withdrawn by computing Capital Gains and for this purpose Cost of Acquisition of such house shall be reduced by the amount of exemption allowed.

Regards

Varun Makhija

Thanks for your reply. But I want to know whether we can purchase 3 individual houses one in my mothers name, one in my name and one in my sister name. As my friend informed me that under sec 54 only one residential house can be purchased in my mother name and for the remaining amount/purchases the tax is to be paid. kindly advise.

 you can purchase more than 1 house and can avail exemption but house should be purchsed by the old owner.

Agrre With Mr. Manish , & the period from date of sale to date of  purchasing should not excees 3 years.. you have to buy the new house/propert with in 3 years from the date of sale

Gaurav sorry for saying this,, but u have to purchase the house after 2 years from the date of transfer or construct the one or more houses within 3 three years. Construction ke liye hai 3 years but not for the purchase.

Dear Sethu

There was an interesting decision by the HC of Karnataka in the case of

Ananda Basappa (309 ITR 329) in 2009.

The court adopted a view that "a" does not mean "one". It means plural also.

The bottom line in this decision is that 

When a Hindu undivided family's residential house is sold, the capital gain should be invested for the purchase of only one residential house is an incorrect proposition. After all, the Hindu undivided family property is held by the members as joint tenants. The members keeping in view the future needs in event of separation, purchase more than one residential building, it cannot be said that the benefit of exemption is to be denied under section 54(1) of the Income-tax Act.

Find this link below.

https://www.cainindia.org/news/4_2009/exemption_capital_gains_purchase_of_a_house_purchase_of_two_adjoining_flats_citation_309_itr_329.html

thanx to Evil for the case law.... very usefullll......