• Capital gains on self constructed house

I have a self constructed house. I purchased land in 1996 built groundfloor in 2001 I floor in 2007...after that incurred various improvements such as woodwork water sump borewell from time to time on various years ...now i donot have any bills for all of these including construction cost... now i am planning to sell the property ...how do i arraive at indexation benefit ...do i need any certificate for cost of property or my calculation is enough ?
Asked 6 years ago in Income Tax

Hi

Although the documentation is only needed in case a query arises from the department, and not when return is filed. But, it is always advisable to maintain all invoices for improvements.

In case invoices are not available, you can get a valuation done.

Lakshita Bhandari
CA, Mumbai
5687 Answers
908 Consultations

5.0 on 5.0

Dear Sir,

In your case building gets constructed in various F.Y. i.e. land is purchased in 1996, construction took place in 2001 and 2007 therefore benefit of indexation will be provided from the respective financial years. For land you can get the valuation done as on 01.04.2001 which is accepted by the income tax department. For cost of construction if you dont have bills/vouchers, there should be withdrawals from the bank for the same or at last you can obtain valuation report for different years alongwith your affidavit. Also retain the photos of land and construction to substantiate further at the time of scrutiny.

Thanks

Vivek Kumar Arora
CA, Delhi
4825 Answers
1029 Consultations

5.0 on 5.0

Hi,

You can get the property valued from an independent valuer for the Construction cost incurred by you.

This will be required in case query comes from income tax department.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

In the absence of any proof to substantiate your claims, it is advisable to get the property valued by an independent valuer.

Alternatively, you can take the actual amounts that you have spent and take the indexation on the same but if a query comes you will need to justify and prove the expenses.

Hope that clarifies.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

In absence of expenses bill for self construction and improvement of house, you can get valuation done from certified valuer and take indexation benefit with that amount.

If you wish to take your calculated figure,then onus to prove is on you in case of query from department.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

HI,

For the purpose of capital gains calculation, you can follow your estimation, however you will need the bills to substantiate the claim if the tax man comes back asking questions, it would be good if you take the current market value of the improvements and constructed additions and then apply depreciation for the years of usage.

Thanks

Damini

Damini Agarwal
CA, Bangalore
405 Answers
31 Consultations

5.0 on 5.0

You can file returns by taking estimated cost as cost of improvement and take indexation benefit on that. However, it is recommended to get a proper valuation done from a Register Valuer so as to reduce disputes if your case is picked up for Scrutiny

Pradeep Bhat
CA, Bengaluru
542 Answers
94 Consultations

5.0 on 5.0

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