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Tax on Plot

Tax queries 296 views 10 replies

Yuvaraj

SSE

34 Points Posted on 23 June 2020

I have taken 1000 sq ft plot at rupee 10L by taking loan of 7L for 10 years. After loan period end, if i sell it at rupee 20L, then will i have to pay tax on that whole amount? If yes, how much tax will i have to pay?

Replies (10)

David

article Assistant

1644 Points Posted on 23 June 2020

Hlo, here Sales value =20L less purchase cost 10L. Here indexation benefit available for you. So you can calculate purchase cost accordingly. Purchase cost will be more than 10L after indexation.
Here your capital gain will be 10L ie is 20-10. Without taking indexation..
You have to pay tax at the rate 20% on 10L since it is Long term capital gain.

Yuvaraj

SSE

34 Points Posted on 23 June 2020

What si mean by indexation? how it is calculated?

David

article Assistant

1644 Points Posted on 23 June 2020

Indexation is used to adjust the purchase price of an investment to reflect the effect of inflation on it. Please check this. https://cleartax.in/s/indexation-helps-reduce-tax-debt-fund-gains

Spurto Consultancy Services

Consultant

1891 Points Posted on 23 June 2020

Capital Gain will arise on the sale of plot:

Sale Consideration: Rs. 20 Lacs

Cost of acquisition: Rs. 10 Lacs

Indexed Cost of acquisition is to be taken: 10 Lacs*(CIF of year of sale/CIF of year of purchase)

Yuvaraj

SSE

34 Points Posted on 23 June 2020

so I will have to pay 10L* (20/100) = 2L tax

is that correct?

David

article Assistant

1644 Points Posted on 23 June 2020

No. You can get the benefit of indexation... Please mention the year of purchase and sale.

Yuvaraj

SSE

34 Points Posted on 23 June 2020

year of purchase 2010. year of sale 2020

David

article Assistant

1644 Points Posted on 23 June 2020

Cost inflation for 2010-11 is 167 and for 2019-20 is 289.
Indexed cost of acquisition will be
10L*289/167= 17,30,538
Tax will be ( 20,00,000-17,30,538) *20%= 53,892