Long term capital gains calculation

Suppose if I now buy a plot(with cost 40 lacs after taking a loan from bank) and register it on guidance value( 20 lacs). After 1 year if I build a house on that plot (cost is around 20 lacs). After 10 years, after completing the loan, if I sell that house (with 1 crore) how the long term capital gains will be calculated ? I know that capital gains are calculated on total profit - total cost. In this case the capital gain should be calculated on 40 lacs profit. But how will I prove that time that the construction of the house took 20 lacs. At that point of time, I could say that construction of my house took 40 lacs and so capital gains will be calculated on (1,00,00,000 - (40,00,000 + 40,00,000)) or 20 lacs. How actually the capital gain calculation happens in this scenario ?
Replies (5)

It is not compulsory to register your plot at guidance value only. You can register at actual price of 40 lakhs. No problem in future.

For construction cost keep the bills and take valuation report after completion.

Thanks Sir for your quick response. I have few more questions.

a) Who will give me valuation report ? 

b) For the valuation reports, furnishing the bills are necessary ? If I give contract for building to a mason, the head mason may not give me a slip/recipt for cost, how can i keep a record for the money spent ?

:"a) Who will give me valuation report ?"              Government Approved Valuer.

b) If Valuation report along with sanctioned plan and completion certificate are there, individual bills will not be of use.

I have a rented shop since 1970 and no cost of aquisition.Now if I get some compansation for parting with the possession what will be the taxation.

And in case if I form a company and take other share holder with premium , how this can be accounted in ITR.

@ SHRMONEY: : " I have a rented shop since 1970 and no cost of aquisition.Now if I get some compansation for parting with the possession what will be the taxation."

As per Court Judgements, the gains is treated as capital gain and the cost of aquisition is taken as NIL.

The present market value of the shop is taken as your capital contribution.

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