• Calculation of LTCG

Dear Experts:

I purchased a plot of land in 2006 through instalments. The Letter of Allotment was issued in May 2007, The registration of the plot was done in October 2012. The instalments were paid between 2006 to 2012.

How do I calculate the indexed cost of acquisition for calculation the Long Term Capital Gains on its sale?
Asked 1 year ago in Capital Gains Tax

Apply indexation on total cost of acquisition considering cost inflation index of first year of payment of instalment

 

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4935 Answers
1099 Consultations

Dear Sir,

 

Hope you are doing well.

 

To calculate the long-term capital gains tax payable, the following formula is to be used:

 

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:

Indexed cost of acquisition = *cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.

 

*Any payments made before allotment is to be provided indexation from the date of allotment and any payment made after is to be provided benefit of indexation from the date the payment is made.


We may assist you capital gain tax calculation & entire procedure.

 

It is advisable to take a phone consultation for detailed discussion. 

 

 

 

Payal Chhajed
CA, Mumbai
5188 Answers
297 Consultations

Dear sir,

 

As per my knowledge there have been case laws where it has been said that date of purchase for capital gain would be date when you were given possession i.e. allotment letter and hence you can take 2007 as date of purchase and calculate capital gain. Although AO might not agree to it but you can fight.

 

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
4292 Answers
101 Consultations

Hi

 

The indexed cost of acquisition shall be calculated using the cost inflation indices of the respective years of payment.

Lakshita Bhandari
CA, Mumbai
5687 Answers
930 Consultations

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