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Indexation cost calculation

15 February 2022

My question is on LTCG on sale of house in Tamilnadu. Plot purchased in 1986, building constructed in 1987. GLV of 1986 is 15600/-. A 1600 sqft approved building constructed.
I am selling the same now for 1.1 crore.
What amount of LTCG is to be reinvested under section 54 to claim tax exemption.

I need your advise on calculating the indexation cost of purchase.

Secondly ,can I reuse section 54 by purchasing only ONE residential unit { TWO units applicable only once in lifetime } for the next financial year as I will be receiving LTCG on another residential property going to be sold in four months.

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4 Replies

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 15 February 2022

First findout the the capital gain.

You need get FMV as on 01.04.2001 since the base year changed to 2001-02 FY.

You may Invest in residential house properties but there is a lock in period .You can't sell in 4 months

Arvindh Badri (3 Points)
Replied 15 February 2022

Is FMV (fair market value) same as GLV (guide line value)?.

If so, the glv as per Tamilnadu website is 351/sqft at 2002 (2001 not available in webpage).

What would be capital gain in this case?.

Secondly, the lock in period is three years and not 4 months. Isn't it

SHEIK FAHEEM (Student CA IPC / IPCC) (33 Points)
Replied 15 February 2022

As plot is purchased in 1986 all costs including construction costs are ignored and fair value of property as on 1.4.2001 is considered as new cost of property and Indexation benefit is allowed ( base year (2001) =100, in transfer year (2022)=317 ).

Any net long term capital gain arised on this transaction can be invested in acquisition or construction of new House property in prescribed time limit

if any further assisstance please feel free connect me on faheemsheik123 @ gmail.com.