Capital gains tax

Another question is that my father in law inherit his property from his father.His father alloted property in adjoin mood half to his brother half to my father in law.later my father in law purchase tht half part of property from his brother in 2008 in 7lakh.In 2013 my father in law use tht property & convert it into commercial one.he sold tht commericial property in 2014 in 40lakh as a mrket wht will be capital gain tax he has to pay now.
Asked 1 year ago in Capital Gains Tax from Sikandrabad, Uttar Pradesh
Sir,
For the purpose of tax computation you can reach us on modani005@gmail.com
Shyam Sunder Modani
CA, Hyderabad
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The capital gain tax will be difference between sale consideration received or stamp duty value whichever is higher minus indexed cost of acquisition and indexed cost of improvement if any.  The tax will be 20.6 % of capital gain. However if he can avoid payment of capital gains tax if he avails exemption by investing  the gains or consideration  in investments eligible for exemption. 
Vijay N. Kale
CA, Hyderabad
248 Answers
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I suppose that your father in law sold the entire property, acquired by him from his father and bought from his brother in 2008.

The cost of the property will be the cost of the property in the hands of your father. If it is purchased before 1-4-81, the value of the property as on that date will have to be adopted. Indexation will have to be on this value.

The cost of the property purchased from his brother in 2008 will be the cost of acquisition, i.e., Rs. 7 Lakh. Indexation will have to be applied on this price.The index for 2007-08 and 2008-09 are 551 and 582 respectively. Thus if the asset was purchased during the period Apr- Mar 2008, the index will be 551. If the asset is sold in FY  2013-14, the index to be adopted is  939. The indexed cost of acquisition will then be Rs.11.93 Lakhs. 

The exact amounts will have to be determined on the basis of actual dates of purchase and sale of the property.    
B Vijaya Kumar
CA, Hyderabad
290 Answers
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