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Mohan (Manager)     27 July 2012

Query on long term capital gains tax

My father had executed a settlement deed to settle a residential vacant plot in my name in June 2012. My father had inherited this from his father through a settlement deed executed in the year 2000. I've now sold the plot to another person this month. I am also buying a flat from the proceeds of the sale. I also already own an independent house from 2010. Following are my queries related to Long Term Capital Gains tax in this scenario:

1. What are the exemptions and deductions I am eligible for while computing LTCG tax?

2. Should my LTCG Tax be computed at 20% of Full value of sale consideration - indexed cost of acquisition - (any cost of transfer and improvement)? Or am I entitled to consider the investment I am making in a new flat as a deduction?

3. Also I am assuming that I have time until 31-July-2013 to pay the LTCG Tax? Is that right?

I would be much obliged for an expert answer to these queries!







 3 Replies

Pankaj Gupta

Pankaj Gupta (CA final & M.Com Student)     28 July 2012

Hello dear,....... answers to your questions are...

1) Your tax will be long term capital gain calculated as follows:-

         Sale consideration by you in 2012                                                               XXXX

Less:- indexed cost of acquisation by your grandfather                                   (XXXX)

Less:- Indexed cost of improvement by your father,grandfather,or yourself (XXXX)

Less:- Expenses of transfer incurred by you( include stamp duty paid,paper

work fees etc)                                                                                                             (XXXX)

                                                                                      Long term capital gain         XXXX


2) such long term capital gain will be taxable at a flat rate of 20% further increased by 3% education cess. You are required to pay this tax before 31st march 2013.

3) As per sec 54F you can save the above tax by investing the entire sale consideration in purchase of  1 house property 1 year before and 2 year after such transfer.


Mohan (Manager)     28 July 2012

Hi, Thanks very much for the reply. Am I entitled to benefit under sec 54F even I already own an independent house at the time of sale of the vacant land? When I look at sec 54F, I am getting the impression that I am not eligible for that deduction if I already own an Independent house at the time of sale. Is my impression correct?

Thanks again for an expert answer to these queries!

Thanks and Regards,


Pankaj Gupta

Pankaj Gupta (CA final & M.Com Student)     28 July 2012

No it is not like that......u are mis interpreting the law. according to sec 54 f ,the conditions are:- 1) u must transfer an asset other than a house property. 2) on the date of transfer u should not own more than one house property in your own name ( not counting the house newly purchased under this sec)

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