Capital gains calculation

Hi,

Union budget 2017 is still not being passed in the house. once it is approved then we will come to know if period of hold of the property is reduced to 2 years, if it is then you can sell the house before sept 2017 and also claim long term capital gain .

while calculating capital gain you can also deduct if there is any cost of improvement on the property.

as per above information capital gain amount is coming to around Rs 61.5 lakhs.

once the bill is passed then you can claim rs 61.5 lakhs as capital gain and invest the amount under section 54 to claim the same.

Hello Sir,

The new indexation is not yet released by the government, so it is difficult to inform about the Capital Gain figure.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Dear Sir,

New index cost are not announced yet. So we have to wait for the same to be declare for deriving at final working.

Hi,

cost of improvement means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset

it is better to have bills, if in case scrutiny arises then you are required to produce bills to claim such expense

if any wood work is got done those expenses can be claimed.

Hopefully, the Finance Bill, 2017 will become an Act and the proposed amendment to reduce the holding period from 3 years to 2 years for a long term asset will be applicable with effect from the assessment year 2018-19. Assuming that this amendment takes place, the capital gain on sale of your house in Bangalore in April 2017 will be Long Term Capital Gains (LTCG).

The purchase cost of your house is Rs 35 Lakhs, as mentioned by you, in the financial year 2014-15 will be adjusted for cost inflation index, which is yet to be prescribed for the FY 2017-18. The index prevailing in the FY 2014-15 is 1024, while it is 1125 in the FY 2016-17, which is just about 10% over the two years. Assuming that the index will be about 1180 for the FY 2017-18, your adjusted cost of acquisition will be Rs 40.33 Lakhs, i.e., 35*1180/1024. The exact amount will depend upon the cost of inflation index, which is yet to be prescribed for the FY 2017-18.

The LTCG will be around Rs. 60 Lakhs. You may claim exemption of this amount, if you invest the LTCG of Rs 60 L in the purchase of another residential property u/s 54 or in the capital gains bonds u/s 54EC upto a maximum of Rs 50 Lakhs.

The registration expenses incurred by you for the purchase of the property are also part of your cost of acquisition.

The improvements to your house actually incurred by you can be added to the cost of your house being sold and indexed for the purpose of arriving at LTCG.

There is no need to submit the bills for the cost of improvement, while filing your return, but you need to preserve them and submit in case you are asked for. The cost of improvement is an issue of fact, which can be supported with documentary evidences like bills and /or corroborated with other evidences like valuation report and photographs of improvements done.

Sir for claiming indexed cost of improvement you need to have bills if asked for it in future. New indexed rates has not been announced till date as per new budget.

For calculation purpose there is no need to submit bills anywhere since the filings will be online, but for future purpose it is suggested to have bills.

Dear Sir,

New capital gain index for FY 2017-18 has not yet prescribed by the govt and accordingly we will not be able to compute the exact capital gain amount

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hello Sir,

Yes you will be required by produce actual bills or payment proof in order to claim cost of improvement expenses.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Hi,

The Government is yet to notify the revised cost inflation indexes. With regard to cost of improvement, you'll have to substantiate the same with the supporting documents, including invoices / bills.

Trust this clarifies your query.

Regards

Keerthiga Padmanabhan

M.Com., CA, LLB