How to save tax on capital gain and how to calculate capital gain

Hello,

You can approach your registrar and get a valuation certificate for your property as on 01st April 2001. Index that valuation and calculate the value as on the date of sale.

For the construction, obviously you will need documentary evidences to substantiate your cost of construction or else it will get very difficult claiming the same.

Atleast provide the registrar valuation of your property as on 01st April 2001 to help us guide you ways in order to plan your taxes.

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

For calculation of capital gains, we would need the Fair Market Value of the land as on 01.04.2001. Such value shall then be indexed.

As far as construction cost is considered, there should be relevant proofs. Since you don't have them, you may get a valuation done for the construction from a registered valuer.

Once the capital gains are calculated using the Cost of acquisition and Cost of construction, then only we can comment on the question on re-investment of capital gain.

Hi Darshi,

Capital gain will be calculated by reducing the indexed cost of acquisition from the sale consideration received by you.

The cost of acquisition will consist of (1) Value of Land as on 1 April 2002 as per Government records and (2) Cost of Construction of house. The onus of proving the value of construction will be on you, if there is an assessment by the Income-tax Department. If you have no supportings of any nature, you may consider obtaining a valuation report issued by a registered valuer.

The indexation of the land will be from 2002, and the house from 2013-14, when it was constructed.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Hi,

The calculation of Capital Gain Tax has changed due to shifting of base year to 2001-02 for calculating Cost Inflation Index. Since the plot was bought before 2001-02, the Fair Market Value (FMV) as on 01-Apr-2001 has to be determined and indexation has to be applied by taking the FMV as the cost.

If you can get the FMV as on 1-Apr-2001, then I can let you know the actual Capital Gain amount