How to Calculate Capital Gains and What is Indexation ?

In this post we will learn How to calculate Capital Gains or Losses . A lot of people make mistake in this . If you buy a house in 1995 at Rs 10 lacs and sell it at Rs 20 lacs in 2009 . On how much profit will you pay the tax ? If your answer is Rs 10 lacs , you have no idea how to calculate capital gains . Read ahead to understand .

What is Capital Asset ?

Capital Assets are the properties which can be held by a person . Some examples are Real Estate , Shares , Mutual Funds , Gold and Debt Funds . FD’s and other fixed returns Instruments are not part of it .

Taxation

For taxation of Capital Assets , read this : How to use your looses to Reduce Tax

How to Calculate Capital Gains ?

Most of the people think that

Capital Gain = Sell Price – Purchase Price

But , Actually the real formula is

Capital Gain = Sell Price – Indexed Purchase Price

What is Indexation ?

Indexation is a technique to adjust income payments by means of a price Index , in order to maintain the purchasing power of the public after inflation. We must understand that prices in general also rises, so the actual prices should not be used while computing the profits , rather It should be Indexed as per Inflation in the country ,so that people can get the real value from sale of there assets . Indexation is used in Tax treatment for Debt , Gold and other asset classes

What is Cost Inflation Index (CII) ?

Year CPI
1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-00 389
2000-01 406
2001-02 426
2002-03 447
2003-04 463
2004-05 480
2005-06 497
2006-07 519
2007-08 551
2008-09 582
2009-10 632
2010-11 711
2011-12 785
2012-13 852

How to Calculate Indexed Purchase Price ?

Indexed Purchase Price = Purchase Price * (CPI for current year / CPI for year of purchase)

Once you have Indexed Purchase Price , you can subtract it from Sale Price and get your capital gains .

In some products Long term Capital gains is around 20% with Indexation and 10% without Indexation . In Equities Long term Capital Gains is exempt from Tax .

Let take an Example

 

Purchase Price 1000000
Year of Purchase 1995
Sale Price 2500000
Year of Sale 2008
No of Years 13
Purchase CII 281
Sale CII 582
Indexed Purchase Price 2071174
Capital Gain 428826
Tax with Indexation 85765
Tax without Indexation 150000

 

 

I hope the above example is clear . Below is the calculator I have created for you to calculate Capital Gain tax for your self. Just play with different numbers . Just enter the year of Purchase and Sale and It will figure out the CII (incase it does not, please put CII yourself)

Capital Gains Calculator
I have made a Calculator for you : http://public.sheet.zoho.com/publish/manish.pucsd/temp

Capital Gains Tax with Indexation and Without Indexation

There are some asset classes where you have the choice of using Indexation or not . This is true for debt funds and FMP’s. So the current rate is either 20% with Indexation or 10% without Indexation for Long term Capital Gains .

For Tax without Indexation , you simply find out normal profit (sale price – cost price) and then calculate the tax .

So you can calculate tax using both ways and then choose the one which is lower :) .

How to save your Capital Gains Tax ?

For people who are miser and do not like to pay lot of taxes , govt has provided some relief to them . Govt says that If you dont want to pay tax on your capital gains , you can do following things to save your taxes .

Invest your Capital Gains in Real Estate :If you invest your Capital Gains in Real estate within 2 yrs , you will get the the exemption .

Invest in Capital Gain Bonds :There are some specific bonds issued under sec 54EC , some of them are NHAI or REC bonds . You have to invest in these bonds within 6 months. Generally the lock in period is around 3+ yrs . interest on NHAI or REC bonds is around 5-5.5% .

Tax on Capital Gains can be different for different People

Please note that Capital Gains tax can vary from one person to other person depending on which tax bracket he/she belongs to . It will also depends whether Tax with Indexation or without Indexation works out to be cheaper for him or not .

Note :For calculation purpose the Financial years are business year from April – Mar , Not Jan – Dec . If you buy in June 2009 and sell in Jan 2010 , you are in the same year not 2 different years .

Conclusion

So , In this post we learned how you can calculate capital gains and also take advantage of tax benefits for saving your taxes on capital gains , Your aim should be to understand the process and learn about it, so that you can take informed decisions in your financial life . No one should take advantage of your ignorance and also to take quick decisions and make rough calculations when there is a need. If you know these rules , you can take better decisions

Questions for you

Suppose you are age 30 .
– In June , 2000, You buy 20 lacs Home
– In Aug , 2007, You buy stocks worth 10 Lacs
– In April , 2008 , your sell your house at Rs 30 lacs
– In June 2008 , your stocks have gone down in value are worth Rs 3 lacs now .

What should you do to avoid paying any tax on capital gains made from House ?


In previous post I have discussed “What is NPS , New Pension Scheme” by Govt of India . Read it

 

666 CommentsAdd Comment

  1. Arun

    Ok I read this but I could not figure out this about short term stock transactions

    If my mom who is a housewife is doing the stock transactions for me then what happens if she short sells the stock..
    She has not other income.. only income is profit from stock sales..
    Now will it still be taxed at 15% flat even if its lesser than the lowest tax slab?

    Your article says to avoid tax, the goverment says invest in real estate?
    What is real estate? Is it only plot or house+plot or flat.. where can I find that info?
    Don't kill yourself trying to give these answers, I am just thinking loud..

  2. Manish Chauhan

    "If my mom is a housewife who is doing stock transaction for me" ?

    There is nothing like that . Either she does it from your account or from hers , If its done from your account . then its done by you , no matter who does it behind the scene . It will be your income and taxed at 15% (short term) .

    tax on Equity transactions do not depend on your tax slab , its just taxed at flat 15% .

    Saving from Real Estate . As per tax rules , you can save tax in 2 ways from real estate. When you pay your EMI for home loan , it has principle and interest part , you save upto 1 lac on principle and upto 1.5 lacs on interest .

    This is applicable to Readmade residential homes or any house which you build on a plot (House+plot) .

    Manish

  3. Manish Chauhan

    @Samit

    As per Section 2 (ea)(i) of the Wealth Tax Act, guesthouse, residential house and commercial building are treated as assets subject to certain exceptions. These assets are liable to Wealth Tax.

    Source : Rediff.com

    Which means that the tax rules are same for both kind of real estate .

    Manish

  4. Satya Vyas

    That was very value adding..
    i have a question,i am soon about to start my job, but the issue is that I will be joining abroad and then remitting money in india to my account.

    The issue is that i dont have to pay any taxes on my remittances, but since the remitted money is in my account only will I have to pay taxes in India as I have spent more than 182 days in India,if so then what source of income I am supposed to show?

  5. Manish Chauhan

    @Satya

    As per my knowledge the amount earned outside india is taxable here in india .. i am not sure of rules in detail on this ..

    Can anyone else help us in understanding this better .

    Manish

    • gopal agrawal

      If you earn out of India it is your status which is important that is resident or non resident.
      If you remain outside india for more than 183 days in a financial year you will be treated as non resident indian and your income earned out of india will not be taxed in \India.But if you earn out side India and remain ther for less than 183 days that income will be taxed in India along with Income earned in India.
      If you want to send money to any of your relative it is best to open and NRE account before goin gabroad and transfer that money from that acccount to anybody you are intrested to give to prevent hurdles of taxation
      These transfer of money should be only through banks and not through any havvala transaction .

  6. Manish Chauhan

    @Karan

    Indexation is not even allowed on shares with listed exchanges. The reason is because LTCG is exempt from tax . thats why

    @Sandip

    I dont think you will get the tax benefit . The rules will be applicable only if the proceeds are used in Real estate purchase in India , because then it will clash with rules in UK and Indian govt wont get any benefit by your investments .

    manish

  7. Reema

    Hi,

    would investing in real estate to save LT capitaal gains mean buying a new property within 2 years? can the tax be saved by using this capital gains to prepay an existing housing loan which has been purchased 3 years back?

  8. Manish Chauhan

    @Reema

    You cant save tax on short term capital gain from Real estate (which is before 3 yrs) , and you can save LTCG only if you invest that money in another real estate property within 2 yrs of gains realised .

    One thing i am not sure if if you can save tax by investing in something which is already purchased ?

    Manish

    • sreedar

      Want to clarify if you say that the reinvestment in new real estate of the capital gain should be made within 2 years from the sale of the property. Which means from the date of sale or from the end of the particular year, i.e, if I sell in July 2012 by when the reinvestment to be made so that I can avoid the Tax, is it July 2014 or Dec 2014.

      Meanwhile can a portion of this amount will be avoid to repay my loan for the existing construction going on.

      Sreedar

      • Sreedhar .. its exactly 24 months . so July 2014 . Also note that if you dont take the decision of selling in the same year, then you need to pay tax . Because no one knows for guarantee that you will be using it in next year or so ,what if you are just lying . so you will have to keep it in “Capital gains account”

    • Ashish

      Thanks Manish,

      One thing I would like to know is – if I am selling my underconstruction property within 2 years of its purchase AND if I am reinvesting it in another property (as downpayment) then am I liable for taxation?

      Also, if I park this Short term Capital Gain in Capital Gain Account Scheme (CGAS) and use it in another property (as downpayment) then am I liable for taxation?

      Please help.

  9. Sivakumaran

    Hi, if my income is in the 30% slab and i have a short term capital gains of Rs 50,000 from sale of shares, would i have to pay the 10% tax on STCG as well as 30% as income tax? i am not getting a clear answer for this. thanks

  10. Manish Chauhan

    @Shivkumar

    you only pay short term capital gain of 15% (changed from 10% to 15% in last budget) .

    You dont pay anything else .

    Manish

  11. SANDEEP

    Hi Manish,

    I had booked the flat in May 2006 and did Registration in March 2009 and now I'm selling the flat in August 2009 so my profit will be short term capital gain or Long term capital gain.

    Thanks in advance

  12. Manish Chauhan

    @Sandeep

    Sorry but i am not sure on this , but by logic its registration date which should matter . Thats the main thing which is on record , so it would be STCG .

    can any body else conform this .

    Manish

  13. prapti vahia

    i have one row house and i m planning to sell it in this year, my purchase prise is 3.4 lac and i expects 40 lac now, so can u pl. guide me what amt. will come on long term capital gain if i puchase a flat or if i dont want to purchase a flat? what will b my tax with indaxtion and withour indation, i tried your calculater but the figure comes grater in tax with indation than the tax without indation can it possible? can u guide me what should i do? pl. advice

    prapti

  14. Manish Chauhan

    @Prapti

    Yes its possible that tax from indexation comes more than without indexation , in that case your tax liability will be the lower of the two , your cost price needs to be indexed first as per your year of purchase , so your sell price will be 40 lacs and your cost price will be the indexed one .

    The difference will be the profit , which you can invest in another real estate project (flat) within 2 yrs of sale of your current house .

    Manish

  15. Geetha Kumari

    Hi Manish
    We purchased a flat in 2000 Feb for 7 lacs (Builder cost+registration) Spent again around 4 lacs for interiors(direct execution by us).Sold the flat in 2008 nov for 24.5 lacs.We have not put the money in Capital gain account.But we have purcahesd a new house (agreement done in 2007with another builder )for which we have paid thru loan Rs 18lacs(payment done by may 2008)balance 6 lacs paid in march2009 after selling the old flat. registration is planned in 2009 October .Could you please tell us whether we need to pay CG tax in such situation as detailed h/w?If so, how much it will work out.
    Thanks & Reg
    Mrs.Pilla

    • Ravibabu

      From another source on this subject on the internet:
      Here, the answer is in the taxpayer’s favour, in as much as, there is no necessity of any live link or one to one correspondence between the capital gain amount and the investment in fresh property. To put it differently, a taxpayer can for example, acquire the fresh property through a housing loan and invest the sale proceeds in a fixed deposit and still avail of the exemption. The law is satisified as long as the amount of long-term capital gain per se, gets invested in fresh property-the source is immaterial.

  16. Manish Chauhan

    @Geetha

    You total cost was 11 lacs and your indexed cost is

    >>> 11 * 551/406.0
    14.928571428571429

    15 lacs approx .

    Your profit in that case would be close to 9.5 lacs . Now you have used 18 lacs from loan and only 6 lacs from the profits . which means that rest 3.5 lacs profit would be taxation , and its will be 20% now … (If you want indexation) .

    So close to 70k should be your tax here .. All figures are approx figures . You should look for a tax expert for details ..

    Manish

  17. Amit

    Good Job.
    Now tell me, what happens for a property bought before 1981-82… lets say in 1971.
    I understand one needs to compute the "Fair Market Value" of the property as on 1.4.1981. How is that done? How does one reach such a value?
    e.g. I bought a property in 1971 for Rs. 25000 and sold it in 2009 for 21600000. Let's say I spent an actual (not inflated) sum of Rs. 500000 on renovation and repairs of the house over the years. What is the profit to be put up for capital gains with indexation and without indexation.

  18. Manish Chauhan

    @Anil

    oops .. I have really no idea about that .. This is rare case. there are hardly cases like this where one has hold an investment for so many years .

    Your invest ment return has been around 19.5% CAGR which is very very good :) . Congrats .. Let me see if i can get any info on this . please share this info if you get from somewhere .

    Manish

  19. @Srikanth

    Yes , You are correct .. people dont know these basic stuff and hence they loose out on many things .. I am sure knowing these things would be great …

    Manish

  20. ANN

    Hi,
    Suppose I have bought a land for 1.6lacs in 2005 and sold the same for 16.5lacs in 2009 and used the money gained to pay off my home loan which I took in 2006 for a flat for which i was paying EMI till date and the property is only ready for poccession in 2009 december, will I be excempt from capital gain tax or how much should I pay towards capital gain tax if I have no other source of income. Appreciate your reply.

    Thanks ,
    Ann

    • @Ann

      So if you invest your proceeds within 2 yrs of sale it should be expempted . But the property was bought in 2006 , Here I am not sure because the deal took place after just 1 yr of buying the Land . You should look for a CA or Tax expert for this .

      Manish

  21. Hey Manish

    This article still does not explain one condition. Suppose I bought a house in 1990 for Rs.x, sold it in 2006 for Rs.y. But if in between I also did some structural enhancements for Rs. z say in 1995. The how will the indexed value be calculated?

    Many thanks for replies in advance
    Srikanth
    .-= Srikanth´s last blog ..30000Km drive report for Swift VDi DDiS =-.

    • oops .. I am not sure about this .. But the way it should work is that it should not be covered because when you sell it , you will anyways reap the benefit of that while selling , so the Selling price would incorporate that .

      • vineet

        I believe the advantage of investment made in 1995 is added in 1995 to the indexed value arrived at in 1995. Thereafter this new value used for computation. I am no tax wizard or accoutant, i am here for a query, so please index by answer for inflation :-)

  22. vinay

    Hi Manish,

    Flat costing 8L was bought in 1995 and sold at 30L in Dec 2009. How much tax I hv to pay. I hv kept the sum of 30L in Capital gains account of Vijaya bank. To avoid paying LTCG tax, do I need to invest the full 30L or only the taxable amount ? If I pay tax to the govt, can I keep rest of the amt in FD to avail interest for my retirement benefit? Do I hv to pay tax on that sum every year even if I keep that amt in FD? If I buy a new flat, can we include registration and stamp duty charges for calculation in order to avoid LTCG taxation?

    Regards

    vinay

    • Vinay

      You have to pay tax only on profit and not full 30 lacs , Also your profit will not be 22 lacs , it would be lesser because your Cost price will not be taken as 8 lacs , but more because you can use indexation benefit (Inflate the cost) . See my post on Indexation .

      I can see that you want to avoid paying the tax . Thats possible . Here is how

      1. You can use the profits to invest in another residential property within 2 yrs .
      2. you can invest the amount of profit in 5 yrs lock in NHAI or REC bonds , that way you dont have to pay tax ,

      Also you can pay the tax and keep the amount in Bank, but then the amount you get every year will again be taxable because its a brand new income for you . this happens with any money you keep in bank , Bank interest is always taxable no matter what .

      Manish

      • Vinay

        Hi Manish,

        Txs for the prompt reply. Just correct me if I m wrong.
        So by using indexation, my indexed purchase value of my flat becomes Rs 1797683; so my taxable income is Rs 1202317. So actual tax is 20% of this amt i.e. Rs 240463. So options I have are:
        1.. Pay this LTCG tax of Rs 1202317 to the govt, keep the remaining money i.e. Rs 2759537 in the bank and pay annual taxation on the interest I earn on my FD.
        2. Invest Rs 1202317 in some residential property (and not whole 30L) in 01 year from the property sell of date and save tax of Rs 240463.
        3. Put Rs 1202317 in REC or NHAI FD for lock in period of 05 yrs. But initiate this within 06 months of the selling of original property.

        Waiting for the advice.
        Kind regards.

        vinay

        • Yes ..

          2. You can pay invest in a residential property within 2 yrs , not 1 yr .

          Also , you can pay 10% tax on profit without indexation incase its coming lower than 20% after indexation :)

          I would say what we have discussed here is basic , Its matter of lacs of rupees , better hire a Tax expert . He would advice in much detail :)

          Manish

          • Vinay

            Hi Manish,

            As I sold my property in Dec 2009, wht is CII for this period? It cannot be 582 as it is meant for transactions bet April 2008 to March 2009. Pl clarify!

            Regards
            vinay

          • Rajesh

            Hi Manish,

            Three questions in connection to Long Term Capital Gain amount:
            1. Do we have to declare this gain in the IT return for the financial year in which the gain occured? Or can it be declared once the gain amount has been invested in buying a new residential property?

            2. I know we have a Capital Gain Accounts Saving with State Banks where we can park the capital gain for 2 / 3 years from date of sale to avoid the taxation. What if we don’t put the amount in such an account and leave the gain amount in a regular savings account?

            3. Is there a time frame (like 6 months in RUREC or NHAI bonds case) for investing in Capital Gains account ?

            Would greatly appreciate an early reply on this.

            • Rajesh

              1. You need to show it

              2. Its 2 yrs . If you dont put it in CGSA , then its like your income in the year , and if you have not paid tax on it , then obiviously, its a violation of tax rules

              3. its 6 months

      • Ramakrishna

        I have a few questions..

        1) If you keep the money in the NHAI / REC bonds, will the returns from these bonds be taxable?
        2) You can avoid LTCG tax if you invest in another property with-in 2 yrs or before x years . But I am not sure what is x. it must be less than 2. Does anyone know what is x?

    • ok , looks like LTCG tax on them is 20% with indexation or 10% without indexation on unlisted shares . This is just like tax is calculated on debt funds and real estate .

  23. Gagze

    Hi,

    An investment in a private limited company was made at Rs 10 per share and later sold at Rs 100 a share after 2 years. In this case what would be the taxation % rate and would indexing be allowed on sale of Pvt Ltd Shares?

    You are doing an excellent job, do keep up the great work in educating people like us.

    Thanks in advance.
    Gagze

    • Gagze

      Rules are not different for pvt and non pvt companies .

      Its just that

      If STT was paid while buying the shares : Then no tax after 1 yrs on any profit as Long term capital gains are currently exempt.
      If STT was not paid : Then the profits will be added to your salary and taxed .

      Manish

      • Gagze

        Hi Manish,

        Thanks for the prompt response however, I am told by the CA’s that for private limited companies the rate for capital gains on shares sold is 20 % even though I held them for over a year. I am certain that the STT was not paid therefore per your response the profit would be taxable along with my salary. (does the same hold true for public limited companies as well). Can you please re-check and explain in more detail.

        Thanks in advance.

        Gagze

        • Gagze

          ok , looks like LTCG tax on them is 20% with indexation or 10% without indexation on unlisted shares . This is just like tax is calculated on debt funds and real estate .

          Manish

          • S. Krishnamoorthy

            Dear Shri Manish,
            Different CAs give different answers on the vexed question whether the benefit of indexation is applicable for the sale of equity shares of a private limited company, the period of holding the shares being more than 1 year. What is the decision of IT Department? Whether indexation is applicable or not?

      • paramesh

        Sir,

        I understand in case of unlisted / private limited co share, period for holding to claim long-term gain is 3 years. Where as it is 12 months in case of listed shares & securities as per Section 10(23D).

        Kindly clarify is my understanding is correct

  24. happy

    i found this site is really very intersting n helpul, i have a query i have sold some gold in 2009-10 which i bought in yr 1980, now i want to know what will be capital gain tax on it. yhanx

  25. uday patil

    hi manish
    found your info very interesting. you haven’t mentioned about long term capital gains tax for privet limited companies ? kindly elaborate. thanx and regard

    uday patil

  26. uday patil

    hi manish
    i will be more elaborate. what i mean is what if a privet limited company buys a land in say 2006 for say 10 lacs and sells it in 2010 for say 20 lacs. what would be capital gains tax liability for pvt. ltd. company.
    tahnx and regards

    uday patil

  27. Kishan

    Hi Manish,
    Excellet Blog!!..very insightful..
    I have a question though.
    My Father got a flat from a property builder in exchange of a chawl owned by my father in the year 1995
    He sold the flat in the year 2008 at 30Lacs. Now we don’t have an exact Purchase price to be able to calculate the Capital gain of the property. what do you suggest we do?
    How can i calculate the Indexed Purchase price? The rough Market value of the flat in 1995 was 10Lacs but we don’t have evidence of this price.
    Also since the two year term after the flat sale is not complete yet, how much do i have to invest if i have to buy a different property so that i dont have to pay on the capital gains?

    Thanks in advance for your Response

    Regards
    Kishan

    • Kishan

      thanks for your comment :) . What you have asked is a common question . Incase you dont know the property value , you have to hire a “valauer” who are certified people to value the real estate at some point in time (you have to find out how to find them , i dont know) .

      now if they value that its value was 15 lacs , then you can index it and then find your profit . Now if your profit comes at 8 lacs , then you have to invest this 8 lacs only in the next real estate project and you can save tax on that . Got it ?

      manish

  28. Marshal

    Manish,
    “In Equities Long term Capital Gains is exempt from Tax”!

    Just to confirm, if i buy today shares/MF and sell after one year. There will be no tax on profits. Is my understanding correct?

    Marshal

    • Marshal

      Didnt you know this ? Yes that is correct. Long term Capital gains from Equity (Shares and Equity funds [65% or more in Equity] ) are exempt from tax given the STT is paid by you , which you pay anyways when you buy from trading account .

      So if you buy shares or Equity funds (tax or non tax saving) , any profit you make by selling the fund after 1 yr is all yours , NO TAX .

      For less than 1 yr , there is flat 15% tax (2008 , it was 10%) .

      Manish

  29. Naresh

    Dear Manish,
    I have bought 500 shares from a pvt ltd company not listed in stock exchange but registered with ROC in 2006 june,bonus shares of 4500 was issued in feb 2008.I sold the total 500 shares in nov 2009.Now clarify if the total value of sale -cost of buying will attract LTCG or STCG. If LTCG, do I get option of paying by indexation or without indexation? If the difference of gain was about 6lacs, what could be approx tax to be paid? Pls help as this is my first experience in capital gains

  30. vinay

    Hi Manish,

    I am an NRI for long years and have sold a residential property in India in Dec 2009. Capital gains account was opened in December 2009. I am a bit confused, What is the maximum duration before which I should buy another residential propert in order to avoid paying long term capital gains tax? Is is 06 month or 12 months irrespective of NRI or resident indian?
    Regards

    vinay

  31. Ashok Kumar

    Dear Manish
    This querry is in respect to Long Term Capital Gains.I am aware that the LTCG’s can be invested in buying a residential house within one year before to two years from the date of transfer or construct a residential house within three years of the date of transfer of the original house.My question is that if my LTCG is say Rs one crore then can I construct a residential house for say seventy lacs and also buy a residential flat worth thirty lacs and avoid paying any tax towards LTCG’s.
    The problem is that I have been getting conflicting responses.I will be grateful if you could clarify.
    Thanks a ton .
    Ashok

    • Ashok

      The only rule is that you have to use the proceeds in another project , so putting money in two should be ok . That should not be against the rule . but if the money involved is 1 crores , i would suggest consulting a tax expert .

      Manish

  32. abhishek

    i have sold my polt of land on 12-3 09 and i want that i pay the tax without indexing it can it possible for me that i pay tax without indexing the cost of land and pay tax as 10% slab rate please make me reply as soon as possible

    • Abhishek

      What was the buy date ? If the tenure is not more than 3 yrs than there is no way you can save any tax , the profit will be added to your income and taxed , where as if its more than 3 yrs then either 10% without indexing or 20% with indexation .

      Manish

  33. abhishek

    i bought the land on 01.01.1981, when i filled in my software the 10% tax rate is disaalowed by the software

    is on land without indexing is possible to determine the tax rate , well i sale out the land on 12.03.09.

    plese make me reply as soon as possible

    • Abhishek

      forget software , they are dumb .

      You will have to pay the tax at 20% with indexation or 10% without indexation on your profits .

      You can also save the tax on this , by either using the profits by investing in other real estate investments within 2 yrs or investing in REC 0r NHAI bonds :)

      Manish

  34. abhishek

    when i talk with income tax officer he said that without indexing is not allowed on plot of land

    so plese me clarify wheteher it is allowed or nt.

    officer said that without indexation benefit is allowed on equities shares and bond nt on the land so plese make me clear that can i pay tax witout indexation on plot of land for fy 2008-09

  35. Naveen

    A property (plot of land) was purchased in 1979 from a govt scheme for a small value then. It was sold in 2010 by the holder, who is aged 83 now & has many grown up children who are beneficiaries. He himself does not have taxable income.

    Indexation commences only from 1981-82. Grateful if you could please advise how capital gains tax can be computed. Will it be a flat 10% without indexation or 20% with indexation ? If indexation is applicable, how do we do it since it starts only from 1981-82 ?

    How much of the tax on capital gains can be saved by investing in NHAI or REC bonds ? Is there a limit on investment into these bonds ?

    • Naveen

      The beneficieries are entitled to get any share only after the actual owner of the land dies , not before that .

      If a property is bought before 1981 , in that case one has to find a “Valuer” , there are property valuer’s who estimate value of property in year 1981 . Once you get that value you can then apply normal indexation rules.
      All the profits can be investing in those bonds , no limit 5 guess .. check it

      Manish

  36. Yogesh

    I wish to know correct (and current) rules of setting off Capital Gains related to Shares and Mutual Funds. I have done breakup of the Capital Gains as rules for ‘Equity Oriented’ mutual funds are different from ‘Debt Oriented’ mutual funds

    Here is the break-up:

    a) This year: Equity Based Mutual Fund Short Term
    b) This year: Equity Based Mutual Fund Long Term

    c) This year: Debt Based Mutual Fund Short Term
    d) This year: Debt Based Mutual Fund Long Term

    e) This year: Equity stocks Short Term
    f) This year: Equity Stocks Long Term

    g) Last year: Equity Based Mutual Fund Short Term
    h) Last year: Equity Based Mutual Fund Long Term

    i) Last year: Debt Based Mutual Fund Short Term
    j) Last year: Debt Based Mutual Fund Long Term

    k) Last year: Equity stocks Short Term
    l) Last year: Equity Stocks Long Term

    ——————————————————————

    I am confused about the rules used for set-off. But following is what I think (which may not be correct)

    m) Last Year’s Equity Long Term which cannot be carried forward is = h + l (permanent loss)
    n) Last Year’s Debt Long Term that can be carried forward = j
    o) Last Year’s Debt Short Term that can be carried forward = i + k

    p) This Year’s Short Term so far = c + e
    q) This Year’s Debt Long Term so far = b + d + f(?)

    r) Short Term offset = p – o = Taxed? or can be offset with ‘s’
    s) Long Term offset = n + q = Still available for offset

    But if ‘r + s’ is allowed then it is available for offset next year

    Yogesh – kulkarniay at gmail dot com

      • Yogesh

        Just some figures below:

        a) This year:Equity Based MF ST : 0.0
        b) This year:Equity Based MF LT : -69945

        c) This year:Debt Based MF ST : 71572
        d) This year:Debt Based MF LT : 244547

        e) This year:Equity stocks ST : 288121
        f) This year:Equity Stocks LT : -56701

        g) Last year:Equity Based MF ST : 0.0
        h) Last year:Equity Based MF LT : 12154

        i) Last year:Debt Based MF ST : -252751
        j) Last year:Debt Based MF LT : -255094

        k) Last year:Equity stocks ST : -91317
        l) Last year:Equity Stocks LT : -58429

        ——————————————————————

        m) Last Year’s Equity LT which can not be carried forward is = h + l = -46275 (permanent loss)
        n) Last Year’s Debt LT that can be carried forward = j = -255094
        o) Last Year’s Debt ST that can be carried forward = i + k = -344068

        p) This Year’s ST so far = c + e = 359693
        q) This Year’s Debt LT so far = b + d + f(?) = 117901

        r) ST offset = p – o = 15625 more (Taxed?) or can be offset with ‘s’
        s) LT offset = n + q = -137193 (still available for offset)

        But if ‘r + s’ is allowed then 120k is available for offset next year

  37. A Roy

    If I take a personal loan and finance purchase of shares through share market and then hold them for more than a year. What are the implications?

    • A Roy

      Both of them are not related to each other . Taking personal loan is not related . you pay EMI on your loan and what ever profit you make on shares will be tax free .

      However the risk is emmense , dont try this . First point is that making profit from direct investing is tough and not advisable , then if you make any loss , it would be bad coupled with high interest you pay on loan , this does not make sense atall..

      Better choice would be to gamble in casino :) unless you are a market expert and have experience in minting money from stock market

      Manish

  38. A Roy

    Thanx Manish. You are proving to be an absolute asset by providing this service. One more query. Is profit from futures and options taxable as short term capital gains @ 15% or will it be treated as income from other sources and taxed according to slabs.

  39. Sunny

    sir
    i have earned profit of 12000/- on shares over a period of six months and loss of 3673 on selling few shares in 2008-09 financial year. what is my tax liability.

    • Sunny

      I would consider that the profit u made in shares was in year 2009-2010 and the losses you made were in year 2008-2009 . Now you can adjust this loss with profit only if you declared the loss in your tax return for 2008-2009 , else forget it . there is no proof of it now .

      Manish

  40. Muthu

    Hi,
    With respect to Short term capital gains on sale of property/Apartment I have the following queries.
    1. Can the interest paid to the bank for Home loan be taken/added to the purchase price ?
    2. Can any closure charges pais to the Bank on account of Home loan be added to the purchase price ?
    3. Can amount paid for water connection, Electricity connection be added to the purchase price ?

  41. My wife has annual income of one lakh (from other than shares) in FY2009-10.She made a loss of Rs. 22000 in derivative trading (F&O) this year and is holding equity of less than one year with profits of around same amount (22000) . Can she offset the derivative loss by selling shares before 31.3.2010 or is she liable to pay short term capital gains tax @ 15% even if her income is non-taxable .

    • Vicky

      She will have to pay 15% tax , no matter what tax bracket is she in , Derivative profits and looses are considered as speculative , so you cant offset it with anything :)

      Manish

      • Thanx Manish for the prompt response.
        Can u elaborate on the derivative losses /profit are speculative part .How does she show the loss in IT reurn , can it be carried forward to next year . Is this speculative trading to be treated as business .Can u recommend any literature for furthur elaboration.
        Thanx in advance . yr website is a great help to people like us.
        Vicky

  42. SAM

    Hi,

    I had purchased house in November 2004 worth 2600000, plus stamp duty, registration and legal another 150000. Now I am selling this house in 5700000 in March 2010. I am buying another house worth 4400000 in April 2010, how much would be the capital gain for me.

    I had taken loan from bank of 2350000 in 2004 and rest was my own contributuion, I had spent about 600000 on purnishing on this house. Now I am clearing this existing loan and taking another 2000000 for the new house.

    Can someone please help me understand how much tax liability I have due to these transactions.

    SAM

    • Sam

      on a first look , seems like your profits are not more than the new house costs , so if you invest in new house now .. there wont be any tax, however its always better to meet a CA for get internal details . This blog is there for very general information ..

      manish

      • SAM

        Thanks Manish for the promt reply, I will be meeting my tax consultant in cuple of days to clear things, was browsing through and found out this thread so thought of asking people here as well.

        Thanks a lot.

  43. Vishal Khera

    Manish,

    Excellent blog, gives so much knowledge 

    I have a question regarding calculation that needs to be done to check if my gain is long term or short term. I will explain it with an example…

    Suppose I purchase shares of a company as per pattern below (all dates are in DD/MM/YYYY format)…

    Date No of Shares Price
    01/11/2008 20 100 (My average price is 100 for 20 shares)
    01/02/2009 20 200 (My average price is 150 for 40 shares)
    01/05/2009 20 300 (My average price is 200 for 60 shares)

    Suppose I sell my shares as per transaction below

    Date No of Shares Price
    28/02/2010 60 400

    If I calculate on average basis, my average investment as of 01/05/2009 is 200 X 60 = 12000. And the sale of shares has given me 400 X 60 = 24000.
    So my gain on average basis is 12000.

    In this case how do I calculate if my gain is long term or short term? It is actually long term for the first two transactions as my date of sale is greater than 1 year for the first two investments?

    Can I do the calculation the way below…

    For the first two transactions my investment is 150 X 40 = 6000
    Sale of these shares has given me 400 X 40 = 16000
    So gain is 10000, can this be considered as long term gain?

    For the third transactions my investment is 300 X 20 = 6000
    Sale of these shares has given me 400 X 20 = 8000
    So gain is 2000, can I consider only this as short term gain that attracts tax?

    Regards
    Vishal

  44. pari

    Hi i m a c.a student and practically i know its tax free bt in our xams if we have to show the calculation then shud we index the purchase cost or not,,, plz reply keeping in view academic considerations. and specially for LTCG of STT paid listed shares.

    • abhishek

      well as we all know that us 10(38) any long term capital gain arise from listed share on whichSTT is paid then there is no question of using indexation or without indexation because its always tax free the whole amount u earned from tht amount which is u invested is tax free so no use of word indexation if u gonna use it then it again nothing gonna make difference because answer remain the same tht it is always tax free
      well in exam we need nt do calculation of it just write down the sec and thts why it is tax free no further calculation required

  45. kapil gupta

    Manish,
    You have replied to this question before, But One CA has told me otherwise.
    You say STCG(in shares) is taxed at 15% irrespective of whether any other income is Zero.But I was told that Upto 160000/-(exemption limit) , there will be no STCG tax and after that only will there be tax of 15%.

    Kapil

  46. hardik

    i am going to receive a property as a gift by my father. i want to know if i can sell the property as soon as i receive the gift and buy a new property to claim exemption u/s 54. and will i be allowed to take indexation from the year my father had purchased that property or the year when he transfered it to me.

    plz any1 let me konw

    • Hardik

      I think you should be able to get all the benefits you father was suppose to get .. just make sure the documentation is correct and as per law .. check with a tax expert instead .

      manish

  47. abhishek

    dear sir,
    i have registery of ikrar nama is this is valid proof for sales consideration

    registery of the land is nt made but the power of attorney is transfer to the party and the same is register with the registrar and its was my sales considered which was registered with registry
    so does it effect anyhow my capital gain calculation or it quote this for capital gain calculation of land
    adviced me

  48. Mahesh

    Hi
    If I sell plot and earn capital gains.Can buy a Flat and save Tax?What is the max amount LT capital gains on which tax can be saved.

      • Mahesh

        Thanks Manish,
        But I heard we can not invest more than 50 lakh in LT capital gains in REC or NHAI bonds
        Plus I will get this gain after selling a plot not a house. Can I still save after buying a FLAT.

  49. DEEPAK

    I had purchased a shop in Apr 2008 for Rs 13.5 Lacs in my wifes name. Now in Apr 2010, we are selling the same for Rs 20 Lacs. My wife is a housewife and do not have any other income. What should be the Capital gain applicable and how can we save the same. Thanks for your help in advance.

  50. Akshay

    Hi Manish,
    Article is really informative and detailed, I have one question for you.
    I purchased new House for 56lac. + Registration exp.3lac. in Jan 2010 and paid 48lac from Housing loan and balance 11lac from own resources.
    In April 2010 I sold my old House for 38lac which I bought for 21lac in Feb.2004. After Indexation Capital gain would be about 10lac (approx.).
    My question is, do I still need to deposit this 10lac Capital Gain towards my Housing loan or payment of 11lac from own resources would be considered as investment from capital gain.

    Thanks,

    • Akshay

      As the registration date for first house is earliar than the sale of new house , i dont think it can be used for capital gain adjustment . You might have to pay the tax . I recommed you see a CA on this .

      Manish

      • Akshay

        Hi Manish,
        Thanks for reply, my understanding was based on following fact, copied from some other article. Any thoughts…
        Tax on long term capital gain can be avoided if the sale relates to a property other than one residential accommodation and reinvested in any residential property within a period of 1 year before or 2 years after the date of transfer (Section 54 F).

        • Akshay

          Yes , but your second house was purchased before selling another one , so if you want to save tax on this one , either you use the profits to buy some other property or put that profit in REC or NHAI bonds .

          I would suggest to see a CA , my knowledge is limited on this .

          Manish

  51. Swaminathan

    Sir,

    I am not a salaried person. I bought a vacant plot in year 2003 and sold it in year 2010. From year 2003- 2010 I do not work and have no income. When calculating the capital gain tax for the above sale, can I use standard deduction for the years 2003-2010 for the capital gains.

    i.e

    if standard deduction/exemption limit for each year is assumed to be Rs 50000. from year 2003.

    then total standard deduction between 2003-2010 is : 7 x 50000 = 350000.

    So the taxable capital gain is : cost inflated capital gain – 350000.

    Sincerely,

    Swaminathan.

  52. I purchased a flat in Dombivli for Rs. 10 Lakhs in April 2007. I wish to sell my flat in June 2010 at Rs. 26 Lakhs. How much will the Tax will be.

  53. goutam das

    Hi,
    I had been allotted & purchased some shares in the nineties. There was no STT.
    Now I’d like to sell these shares.
    If I pay stt on sale, what would be the tax on ltcg?

    Thanks,
    Goutam

  54. Athreya

    Hello Manish,

    We, living in a joint family, my mother, my elder brothers family and mine, inherited a house from our dad, who is no more. We recently sold the same @ 26.5 lacs. The plot was bought by my dad in 1993 at 1 lac and we built the house in stages, one in 1999 with a cost of 8 lacs and the other in 2004 with an additional 2 lacs. Also from the money that we got from the sale, it was divided equally among the three of us. Kindly let me know the tax liability in this case. Awaiting your reply as soon as possible.

    Thanks and regards,
    Athreya

  55. t m ramani

    I accidentally landed on your web-site. I am a retired senior bank executive with 46 years experience. Your service through this web-site is extremely laudable. My best wishes to you
    T.M.Ramani
    25.07.10

  56. Gaurav

    Dear Manish,
    Your blog is very informative. I really appreciate your prompt replies to all the queries asked.

    I bought a land in 2002 for Rs. 11,00,000 and constructed a residential complex (6 Flats) in 2005 by imjecting Rs.62,00,000. Now, in 2010, I am selling the flats at Rs. 28,00,000 (total for 6 flats Rs.1,68,00,000). The profits will attract Long Term Capital Gains Tax.
    1. Now while computing LTCG Tax how do I incorporate the construction cost?
    2. Can we calculate LTCG Tax without indexing the purchase value which will attaract only 10% on the difference between the cost price and selling price?

    • Gaurav

      1) I am not sure on this , you need to involve a CA in this as this is not a general query .
      2) 10% is possible , you need to figure out which one turns out to be cheaper for you .

      Manish

  57. Pradeep

    Hi Manish,

    No doubt, lot many ppl have benefitted from this blog. God Bless U.

    My question : I have bought flat costing 18lacs (2 lacs own, 16lacs loan) in 2005, furhter I sold it in March, 2010 in 25lacs. I cleared loan of 16lacs. In between all this, i did not open any Capital gain bank account. Further, i have paid 3+ lacs in few other liabilities like car loan etc. Now, i am remaining with 6lacs.

    Please advise, if closing down liability(other loans) will reduce capital gain. Also, as I do not hve any capital gain account, do i need to open it now, or I can utilize my bank statements to justify the transactions.

    Thanks in advance. Pradeep.

    • Pradeep

      which city is this ?

      You can offset capital gains of real estate only with few things , like capital loss of real estate , debt funds , gold etc . You cant offset with any kind of loan , Also as you have made the profit in March , you were entitled to pay the tax on that by this year itself , However you should have had opened the Capital Gains tax scheme , Its late now as far as i understand it .

      I advice to consult a CA on this, its not a very general query .

      Manish

  58. S. Krishnamoorthy

    Dear Shri Manish,
    In one of your replies, you have stated that indexation benefit is available for the capital gains derived out of sale of equity shares of unlisted private limited co. But our Auditor says that this benefit is not available. Can you kindly explain the correct position?
    2. In the case of debt funds, the cost price will be the original amount invested and the sale price will be the redemption amount and the gains or loss is the difference between the two. Capital gains, if any, is to be calculated on the difference amount. Am I correct?
    Regards
    S. Krishnamoorthy

  59. S. Krishnamoorthy

    Dear Shri Manish,
    I have a point to be clarified.
    Can the capital gains derived out of sale of equity shares of a private limited company, unlisted, be invested in property for claiming exemption from capital gains tax?
    Regards
    S. Krishnamoorthy

      • Narayanan

        Hi Manish, You are doing a great service by sincerely replying to one and all.
        KUDOS.
        Can you pls help answer my query as well.
        I have just sold my equity shares of a unlisted pvt Co, which I had bought in 1990.
        My Qs are
        1)Can I invest the capital gains that I recieved in buying new property for claiming exemption in capital gains tax? I was informed by my CA that this can be done
        2) If I cannot buy a property with this money what % of capital gain tax I will have to pay . Is there any other method i can reduce my taxes??
        Rgds
        Narayanan

  60. Mihir Shah

    Before, I will present to you my case:

    I am selling my property today at Rs. 900000/- which was purchased in year 1991-92 for 99000/- (Indexation Cost = Rs. 353,714/-) plus Stamp Duty & Registration Extra. I am buying new property for 2250000 (Agreement value) + Stamp Duty & Registration Charges of Rs. 115000/-, out of which, Rs.2000000/- would be paid from Bank loan and Rs. 360000/- as self contribution.

    Now my queries is as follows:

    1) Can I claim deduction for brokerage to agent (paid in cash), advertisement in newspapers (paid of cash), transfer fee (in cheque) of Rs. 1000/- paid to the society for my old flat in 1991-92?

    2) If i am eligible for the claim no. 1, do I get indexation benefits for the same?

    3) Can I claim brokerage to agent for sale of Old Flat and purchase of New Flat as Cost of Purchase of New Flat? Do I have to pay in Cheque only or i can also pay in Cash and take receipt for the same ?

    4) I am also going to pay transfer charges for my old Flat too (transfer from my name to new owner name). Can i claim that too ?
    What would it be treated as – Cost of Purchase for Old Flat or Cost of Purchase for New Flat ?

  61. mohit

    dear manish,

    do you please let us know how a private equity will calculate their capital gain tax….as they invest in all kind of iunstrument and in listed and unlisted company, so they basically calculate LTCG. one more thing when they convert debenture to equity share do they need to pay any tax…..if you have any more update relating to the taxation of private equity at the time of exit or conversion of instrument do let me know

  62. harshwardhan

    hi manish ,
    my case is like this :-
    -my dad sold his 3 acres of land in 2010.
    -he is retired from governmentt services in 2008.
    -he received this land from his forefathers. So we dont know in which year our forefathers purchased this land.
    – But m sure that the land is purchased around 50-60 years back.
    – he sold the land for 45 lacs. (amount on sale deed).
    – now i have a flat in my name and to save capital gain tax my dad is purchasing this flat from me.
    – i have purchased the flat in may 2009 for 23.5 lacs and my dad is purchasing it from me for 27 lacs.
    – now my doubt is :-
    1- how much capital gain tax will be saved in this transaction considering indexing , purchasing flat from me. and IS IT A VALID TRANSACTION ?
    2- as i am selling this flat to my dad , do i need to pay capital gain tax ?
    3 – while doing the sale deed process i need to pay stamp duty and registration charges so will it be CONSIDERED for capital gain tax exemption ? (under COST of ACQUISITION tag)
    4 – how much tax will my DAD save in this whole process ?
    5 – what would be the optimum purchase price for my DAD considering stamp duty and registration charges , my capital gain tax , capital gain tax ultimately saved for my DAD ?

  63. Bhuwan

    Hi,

    I purchased a flat in 25 Lakhs in 2009. I sold it in 32 Lakhs in 2010. So capital gain is 7 Lakhs. I used this amount to pay off my car and personal loan and this amount is no more in my bank account. It was there just for 1 month only. So tell me how much tax I need to pay on this.

    Thanks,
    Bhuwan

    • Bhuwan

      It will be added to your yearly income and taxed at your slab , so if your salary was 6 lacs , add this 7 lacs to that , total is 13 lacs and you have to pay tax on 13 lacs

      Manish

  64. kalyan

    Hi Manish,

    i am investing in hdfc top 200 (SIP) through hdfc mf online. I hav just started learning about all these things. U have a great blog for educating ppl like us.

    My question is how to know am I paying STT or not..?

    Thanks for your patience.

      • kalyan

        Thanks a lot!

        Recently I have started few investments and insurance without much knowledge.

        I have postponed my further finance decisions for a while (3 months) and I am trying to learn about the products I have opted for and other finance related basics.

        Thanks to ppl like you for educating and encouraging us……

  65. Raju Anand

    Hi Manish,
    At 27 you know this much congrats and thanx for sharing your knowledge with others.
    can you help me to find capital gains on my Deep Discount Bonds, I bought in 1991. Maturing soon.
    pl correct me if i am wrong.
    Suppose CPI index in 1991 = 200
    2011 = 600
    Cost of bond 1991 = 4000/-
    Sale price of bond 2011 = 50000/-

    So now lets calculate capital gains = sale price- indexd cost price of bond

    indexed cost price of bond :- 4000*3=12000/-
    capital gains:- 50000-12000=38000/-
    tax on capital gains 38000*10/100 = 3800/-
    So while redeeming my Deep Disscont Bonds the company will pay only
    rs 50000-3800 = 46000/- after deducting TDS is it correct?
    Pl reply

  66. Manish Bhatt

    Dear Manish,
    I purchased a flat @ Rs.1,85,000/- on 28.02.2000 & I recently sold it on 01.04.2010 @ 4,75,000/- What would be my LTCG? and How I can save Tax on that?

  67. Juke

    My total income including capital gains falls in the 10% tax slab.

    Do I still have to pay STCG tax @ 15 for short-term trades done on stock exchanges?

    or I just have to pay 10%?

  68. Ram

    Hi Manish,
    Thanks for the informative article. In continuation, I have a query,
    If a vacant plot purchased in year 2000 for 2 lakhs was sold for 20 lakhs, and using that money another vacant plot was purchased within 6 months–
    1. What would be the capital gains tax calculated
    2. Will the tax be exempted since the entire proceeds were reinvested in real estate within 2 years?
    3. Are there any restrictions on the type of real estate (plot) purchased?
    Thanks in Advance,
    Ram

    • Ram

      I think the rules of tax exemptions apply on real estate purchase restricted to House , or land on which house is contructed , just a raw land might not be elegible , I am not sure :)

      Manish

  69. Sunil Kumar Bhardwaj

    Dear Mr Manish Chauhan,
    Please let me know if a vacant Residential plot sold by Haryana Govt (huda) is further sold and a Residential Flat is purchased then for the purpose of Calculating Capital gain does Indexation applies or not.

  70. S.Mohan

    My wife had purchased a plot in Chennai in 1983 for about 45oo. She sold the same in December, 2010. She is a coapplicant to the housing loan availed by me and she is also a joint holder of the property. I want to know whether Capital Gains could be avoided by paying the amount of Capital Gains into the housing loan ?

  71. Sam

    Hi

    2 questions:

    a) for shares purchased and sold on a US stock exchange – does one get the indexation benefit on long term capital gains? LTCG on such transactions is not tax free
    b) if one can claim indexation benefit, then what happens if applying indexation actually results in a loss? For example, if I bought a stock for $5 in 2002 and sold for $6 in 2010, I have made a long term gain of $1 but with indexation it is actually going to be a loss since the purchase price with indexation is actually around $8.3

    Any ideas?

    Thanks

  72. raju

    Hi Manish,

    If my wife(house wife,non working) invests in stock market, mfs with her name,do i need to pay tax on capital gains that she earned.Will that earnings added to my income slab?

    Does she need to file IT returns,
    if returns in a year are less than1.6Lakh?

    Regards,
    Raju

    • Raju

      If the money she is putting is not her own , but given by you , then yes , it should be added to your income (legally) . She does not have to pay any tax if its below 1.9 lacs (note that the exemption limit for women is 1.9 lacs, for men its 1.6)

      Manish

  73. Loknath

    I hv 1 qsn i hd a property wch i prchd on 1.5.79 fr 3lacs &was destroyed by fire on 3.4.09. &i rcvd 25lacs from insurance co.this year. D mrkt value on 1.4.81 ws 450000. So wt is ltcg? Pls suggest me.

  74. Loknath

    Sir. Thr is a qsn that a joint family purchased house on 1.5.85 in bombay for 3.5lacs &sld it on 10.6.04 for 18 lacs. On 17.4.04 it prchd anthr house at hardwar at 4lacs . Pls solve &tel me wht is d income u/h CG. Pls

  75. Rajan

    We were a family of four brothers and had an ancestral property. We got into a development agreement with a builder and later a sale deed. According to the agreement we would receive 15 lakhs each and 3 flats each (which we have not received yet since the last two years). For tax calculation purpose, we got the property assessed as it was pre-1981 by a valuer. The value of the land worked out to two crores. My question is about myself. On what amount would the tax be calculated on 15 lakhs I have received or on the 2 crores which is the value of the land as per 1981 assessment? If on 15 lakhs then how much is the tax and under what section? If on 2 crores the tax is calculated then under what section?

  76. Rajan

    We are a family of four brothers and had an ancestral property. We got into a development agreement with a builder and later a sale deed. According to the agreement we would receive 15 lakhs each and 3 flats each (which we have not received yet since the last two years). For tax calculation purpose, we got the property assessed as it was pre-1981 by a valuer. The value of the land worked out to two crores. My question is about myself. On what amount would the tax be calculated on 15 lakhs I have received or on the 2 crores which is the value of the land as per 1981 assessment? If on 15 lakhs then how much is the tax and under what section? If on 2 crores the tax is calculated then under what section?

  77. Ajay Gupta

    Sir,

    I bought a commercial shop in Jul.2001 @ Rs. 60,000/-. Now I sold this shop in Feb. 2011 @ Rs. 8,10,000/- (due to circle rates).

    If I calculates my LTCG tax with indexation it will be around Rs. 1,46,230/-
    20% of (Rs. 8,10,000 – (60,000 x 711 / 426)) + Edu. Cess.
    And
    if I calculates my LTCG tax without indexation it will be around Rs. 77,250/-
    10% of (Rs. 8,10,000 – 60,000)) + Edu. Cess.

    Can I pay the IT by the without indexation
    Or
    LTCG tax with indexation is compulsory.

    Please help me to solve this problem.

    With lot of thanks

    AJAY GUPTA

  78. Gaurav

    Hello Manish,
    I have sold my 6 years old house 4 months back and bought a flat immediately now I wish to sell this flat.

    My query is what will be the consequences if I sell the new property within 5 months after I bought it!

    Thank you in advance.

  79. melwyn

    Hi,

    Flat purchased in 1995 for 18,00,000
    Flat Sold in 2011 for 92,00,000

    Indexed purchased price = 18,00,000 * (711/281) = 45,54,448

    LTCG = 92,00,000 – 45,54,448 = 46,45,552

    Tax with Indexation (20%) = 9,29,110

    Tax without Indexation (10%) = 10% * (92,00,000-18,00,000) = 7,40,000

    1) Can I pay tax without indexation? Or

    2) Invest Capital gains in Capital gain bonds within 6 months.

    3) What is the max. limit of investment in CG bonds? Is it 50 lakhs per FY

    Please advise.

    Thank you.
    Melwyn
    Mumbai

  80. PARSHURAM

    sir i bought a shop at the cost of rs 28500 in 1995-96..i sold it to another person rs 70000 feb 2011…now i want to calculate it’s capital gain and income tax……sir tell me one thing ..sold price will be calculated what is written in either on RS 70000registred stamp paper or with IT’S DLC COST 231000 OF GOVT RATE

    • Parshuram

      You first have to calculate indexed cost price as shown in the article , then delete it from the sale price , I can see that you will not have profit due to this .

      Manish

  81. PARSHURAM

    sold price is calculated either cost written in article ( registry) or DLC value calculated from which stamps duty is purchased…….please clarify

  82. PARSHURAM

    sold price of a land property is calculated either cost written in article ( registry) or DLC value calculated from which stamps duty is purchased…….please clarify

  83. PARSHURAM

    sir solve my problem….
    i purchased shop..at RS 28500 in 1995-96
    i sold it to another RS70000 .IN 2010-2011WITH REGISTRY TITLE
    the govt value of shop is 231000….as in registry title
    please calculate it’s capital gain and tax..
    I AM WAITING YOURS ANSWER

    • Parsuram

      What stops you to use the formula given in the article. Are you confused at some point . You sell price is 70k , your buy price is 28500

      Your indexed cost price is 28500 * cost price index in 2010 (find this from internet) / 281

      Your selling price is 70K . take the difference .

      manish

  84. Hemant

    Dear Sir,
    We are two brothers from Tamilnadu and settled in Mumbai. We have an ancestral residential property in our home town in Tamilndau. Total value of the residential property is around Rs.6 lakhs. We have decided to partition that and the elder brother (me) will take the residential property and give Rs.3 lakhs to my younger brother. I (elder brother) have a flat in Delhi and I am planning to sell it for Rs.20 lakhs, which was purchased 9 years before for Rs. 6 lakhs (also spend Rs.1 lakh for its renovation at that time) and move to Tamilnadu and settle in the ancestral house. I have to renovate the ancestral house which costs me around another Rs.6 lakhs. I would like to know if we partition the anscestral residential house ( and register in my name) and I Pay Rs. 3 lakhs to my younger brother and spent Rs.6 lakhs for it renovation, can I claim exemption of capital gain tax (u/s 54) at the extent of Rs.9 lakhs (Rs.3+6) as discussed above. I have no other residential property in my name. My parents are not alive.
    If not, if I want to invest in long term infrastructure bond for 5 years, which bonds I have to invest to get exemption and where can I buy that. Whether can I invest in bonds issued by Power Finance corporation, IDFC, etc. to get exemption.

    Thanks in advance and best regards,
    Hemant

    • Hemant

      You will be able to claim tax deductions only at the time of selling the property , you are not selling it actually , but giving your brother some amount . So i dont think you can claim it

      Manish

  85. Hemant

    Dear Sir,

    Thanks for your quick reply. You got confused. I want to sell my flat in Delhi for Rs. 20 lakhs and from that sale proceed I would pay to my brother to acquire the joint family property for Rs 3 lakhs and spent another 6 lakhs for renovotion. So can i claim exemption of LTCG tax of Rs. 9 lakhs from the sale proceeds. This is my question. Thanks and best regards, Hemant

    • Hemant

      IF the sale of your flat in Delhi is after 3 yrs of having the asset , then only you will be able to use those proceeds into paying for another assets . Now you have to see how much is capital gains tax , from that only u can pay for taxes . You can do one thing, you can pay 3 lacs to your brother , but additional 6 lacs will be consired into the cost price of the house, it cant be claimed

      Manish

  86. Sandeep Sethi

    Little confusion.

    In the topic, just above the line “Let take an Example” , you have written “20% without Indexation and 10% with Indexation” whereas in illustration of example it seems the opposite. 10% without indexation (10% of 1500000.00) and 20% with indexation (20% of 428826.00).

    Is it the typing error or may be I have not been able to understand the concept.

    Regards
    Sandeep Sethi.

  87. Janakiraman.V

    Dear Sir,
    pls guide me on following :
    My wife is having residential house wch she received fm her father as Gift after her marriage. Now for some reasons we are willing to sale that subject house.
    House with land is constructed at a cost of 3.0 lacs on 1995
    present selling rate is @ 30.0 lacs…

    Now my question is how this income from sale of residential house
    will be taken for tax calculation for my wife who is house wife without
    any other source of income…
    is she to file tax returns? pls guide me accdgly…

    tks/rgds
    Janakiraman

    • Janakiraman

      yes , she will have to pay the tax as now you first calculate what is the capitla gains , as explained in the aricle . You can reinvest the capital gains in another residential project to save the tax

      Manish

  88. vineet

    There a query on behalf of my mother-in-law. There is a house which was transfered in her name on the death of her husband, by mutation, after signing of NOC by other legal heirs. So,
    1. does she have to pay capital gains tax?
    2. if she sells the property and buys another within 2 years, does she get advantage of the exemption? (i.e. since the property was not originally in her name)

    • Vineet

      1) NO , its not a “sell” . Its just passing of legacy from one hand to another hand . Once she gets it and then sells it to third party , then all those capital gians things will come up .

      2) Yes , even though she gets it recently , the actual buy date would be the original one (husband) . SO she can sell it off and invest in another one within 2 yrs and get exemption

      Manish

  89. Sarit

    I am selling my flat at 90 Lacs
    Buyer wants to pay 30 Lacs in cash and pay stamp duty only on 60 Lacs.
    I don’t have problem in showing the entire 90 Lacs as I am purchasing another property and be investing the whole LTCG of 70 Lacs amount and need n’t pay any tax.

    Can I deposit cash received (30 Lacs) in bank and show in my return the sale price of 90 Lacs and let there be 60 Lacs in the sale agreement and be the headache of buyer if he paid less stamp duty.

    • Amit Jindal

      Sarit, I don’t think you can do that. If down the line IT dept. asks for scrutiny of your docs. then they’ll ask for the docs. related to your transaction and ask you to get confirmation from the buyer that he paid you Rs. 90 Lakhs which he won’t give.

      In that case the Assessing officer can add Rs. 30 Lakhs to your income and tax that with interest and penalty on that tax.

      • Sarit

        Dear amit,

        Tks. As you may be aware that before sale deed is registered, there is a raw deal on stamp paper where even cash component is mentioned. Though that deal is over once the money is paid and then registered document takes over.
        What about this?

        Also, practically if one hunts for just white deal, it may be difficult to find the buyer with 100% cheque payment in few cases

  90. RAMESH CHOUHAN

    IF, I HAVE TWO HOUSE. 1st HOUSE PURCHASES IN 2001-02 ON Rs. 500000 AND SOLD IN 2008-09 ON Rs. 800000. HOW WILL BE TAX AMOUNT CALCULATE.

  91. S Surendranath

    I had purchased a plot in 2003 and later did some constructions worth Rs8lacs or so.

    How do I calculate the indexed cost and then calculate the amount to be reinvested in real estate .Also should this be invested only in residential property or can it like Studio apartments.

    • Surendranath

      What is the actual gap between the purchase of plot and the construction , Looks like you need to find a valuer and hire a CA to find the exact tax amount

      Manish

      • surendranath

        Dear Manish,

        Thanks.The gap between the plot purchase and construction is about 4 years and is done in phases and could not be completed.Can you pls suggest/help in giving contact details of Valuer and CA.

  92. sanjog gandhi

    Sir,
    I recd house( G.F.) by way of will( Gift ) from aunty recently.House constructed in 1978 cost Rs. 40000/- In year 1998 I got FSI right of same house by way of sale deed & constructed First Floor in my name. cost around Rs. 400000/_Now entire house I planned to sold for Rs. 20 lacs.
    I purchased new house cost Rs. 18 lacs in May 2010.
    Guide me what will be Capital Gain Tax, How I can save
    My regular annual income Rs. 7 lacs for which I am filing return & paying I.tax

  93. Sankar Srinivasan

    Sir,

    I had purchased an apartment in 2002 for Rs. 20 lacs and I am selling same in July, 2011 for Rs. 84 lacs, could you please let me know how much capital gain tax I need to pay with indexation and without indexation.

    Thanks in advance for your valuable reply

    Regards,
    Sankar Srinivasan

    • Sankar

      Its clearly mentioned in the article how to calculate it . Cost inflation index is 785 for 2011-2011 and 447 for 2002 . Now just use the formula and tell us also how much is it !

      Manish

      • Sankar Srinivasan

        Hi Manish,

        Thanks for providing the information, please find below my calculation

        Purchase Cost in 2002 Rs. 2200000
        Sale Price in July-2011 Rs. 8200000

        Cost of Inflation 2002 447
        Cost of Inflation 2011 785
        Indexation 1.756152125

        Indexed Purchase 3863534.676

        LTCG – Indexed 4336465.324

        20% of LTCG – Indexed Rs. 867293

        Based on the above information, request provide some clarifications as below

        1) Since I sold the property in July-2011, I have time till March-2012 to decide to buy another residential property or to pay the tax of Rs. 8,67,293 in month of March-2012 and till March-2012 I could deposit money in FD or in any account of my choice ? Is my understanding correct ?

        2) If I decide to purchase residential property before March-2012, the LTCG amount of Rs. 43,36,465 should be deposited in captial gain tax account and same amount need to be utilised for completion of construction before July-2014 ?

        2.1) Assuming I have paid the builder Rs. 40,00,000 till July-2014 and If builder does to complete the construction by July-2014 then I need to pay tax of Rs. 8,67,293 as tax before March-2015, is my understanding correct ?

        Please request you to provide your valuable answers, so I could plan accordingly.

        Thanks in advance.

        Regards,
        Sankar Srinivasan

  94. Alifiya

    hi Manish,plz tell me hw to calculate the cost inflation index(CPI) for the future years eg. for 2012 -2013,2013-2014 and so on. If i buy property this and want to calculate my capital gain over next few years how can i do it?
    thanks a ton
    Alifiya.

  95. Raghu

    Hello sirs,

    I own a residential plot that I bought for 15 Lacs 16 years back. Today I am getting 85 Lacs for it. The plot is in my name. I plan to sell it and buy a residential flat that is costing me 67 Lacs + registration i.e. about 71 Lacs. I plan to buy the new flat in both me and my wife’s name. I have the following questions:

    1 – How much shall be my LTCG? I assume it is NIL since 85 Lacs – 15 Lacs = 70 Lacs which is less than 71 Lacs that I am going to spend towards new flat.
    Am I right?

    2. Do by any mean my investment in new flat be reduced to half since the new flat shall be in both me and my wife’s name while plot is only in my name? In this case, shall I paying tax on 35 Lacs? What shall be rat of tax if it is true?

    regards
    Raghu

    • Raghu

      1. Yes , you will not have to pay any tax on the profit , as your LTCG is less than 70 lacs , infact it will be much less around 30-40 lacs (you have not applied indexation) .

      2. No

      Manish

      • Raghu

        Thanks Manish sir,

        But I have heard in case of residnetial plot, indexation is not applied and whole sale amount needs to be reinvested. Is it true? Is it whole amount or the LTCG amount only? For example, in my case, Is it 70 Lacs or complete 85 Lacs that needs to be reinvested?

        regards,
        Raghu

  96. Daryanand

    Dear Manish,

    I bought my property in 2003 (on loan of 19 lacs )for 27 lacs and need to sell it in Aug 2011 for abt 1 Cr. I have 15 lacs outstanding on my loan which I will have to pay up now that I am selling. Can I subtract the same from my sale price for LTCG calculation. Also if I have made part payments based on progress while buying. SHould I use the possession date (the last payment) or the date of the agreeement (1st payment for advance) as the year of purchase

    • Daryanand

      You need to consider the value of house which was in registeration , so was it 27 lacs, If yes then the cost price is 27 lacs , now index that cost and it will increase , subtract it from 1 cr and thats your LTCG .

      Manish

      • Daryanand

        So I take the indexed price of the cost assuming that works to 45 lacs.

        So capital gain is 1 Cr-45 lacs = 55 lacs

        Now can I subtract the outstanding loan (15 lacs) from this 55 lacs (since I will have to pay that to the bank) Anything else that I can deduct? Like the interest paid to the bank so far on which I have not calimed any tax deductions (since I do not have any income in india for the last 4 years)

        Also assuming I reinvest the entire amount in a new flat (to save the tax), can I pay the builder in installments on completion (maybe over next 3 years) or do I have to pay the entire amt out within the 2 years period.

        • Daryanand

          You will have to pay all the money in start only, other wise people will keep all the money and keep paying from it for 20 yrs, thats not allowed.

          In your case the total LTCG would be 55 lacs, nothing to be deducted from it , from tax point of view only LTCG is concerned, not your outstanding loan

          • daryanand

            No i understand that. What I mean is that assuming I have an agreement to pay the builder for a new appartment for the total amount but I release the payments as per the work getting completed with the last payment being made on possession. And assuming this takes more than 2 years. This is the usual case typically it takes 3 years for a building to comeup from booking to complete possession. Will this be allowed.

            Also the amount to reinvest, will it be 55 lacs (i.e. the LTCG) or the 1 cr i.e. entire sale amount

  97. javed

    hi manish,

    Its really great u’ve been solving so many querries so patiently for so long..m sorry to add one more one to you…..my father purchased a land 22ys ago(1989) for rs45000 (but on sale agreement the cost price mentioned is 8000) we sold the land in apr’11 for 40lacs and booked a flat costing us 70 lacs in a developing society (possesion of flat in 2014). We intend to give the developers of the flat 40 lacs within 10 months…..also the flat is booked on me and my father’s name whereas the land we sold was only on my fathers’ name…please tell us if we need to pay any tax on the amount we recieved from selling our land…also we have immediately invested the amount in property…..

    • Javed

      No , as your profits will be less than 40 lacs and you are anyways putting 40 lacs in new flat , you dont have to pay the tax, but now the issue is if you and your father are contributing amounts ,then your father might be eligible only to claim upto 35 lacs of capital gain , which i think should be ok .

      Manish

      • javed

        thanks manish…just one add on…..my father has one apartment (where we are residing right now) in his name (jointly with my mother), will we have any problem with the second house (concerning the capital gain tax) which we have booked jointly on me and my fathers name (the one mentioned in my above post)..?

  98. MANJUNATH

    We have entered to JV of our property with 63% : 37% ratio with builders. How does the capital gains implication If we get 37% ratio and will invest full amount in getting a site and build residential house for own purpose since presently we dont have any residential house for our own. Do we are eligible for availing exemption under sec 54F. Please clarify

  99. premal

    Dear Manish,

    If I have made some long term capital gains due to sale of shares of an unlisted company. Correct me if I am wrong, the indexation will be applicable for the tax treatment…… My question: Is there any way to save the tax through sec 54ec or otherwise ?

    Rgds,
    Premal

  100. Karthikeyan

    Dear Manish,

    Please find the detail of my transaction (sold a flat)
    Purchase Price 1500000
    Year of Purchase 1993
    Sale Price 5500000
    Year of Sale 2011
    No of Years 18
    Purchase CII 244
    Sale CII 711
    Indexed Purchase Price 4370902
    Capital Gain 1129098
    Tax with Indexation 225820
    Tax without Indexation 400000

    If I reinvest 11 lakh, can I avoid paying tax? Do I have to buy a house/flat or can I buy an agricultural land.

    Thanks for your time.

  101. Dr. Maneesh Aggarwal

    Hi,
    1. Tell me CII for 2011-12.
    2. Can LTCG from sale of a Residential plot be used to buy a commercial plot, in order to save tax on LTCG.
    3. If the residential plot was bought using a bank loan. Than does the interest paid to the bank add up to the cost price, in order to reduce the LTCG.

    Regards

  102. Aishwarya

    Hi,

    We are selling off our family business (private limited company) by way of selling the equity shares (purchased in 2007) held by our family members. Will the profit from the sale attract long term capital gains tax? The clause regarding the exemption of this tax from sale of equity shares is confusing. Hence the question.

  103. Sankar Srinivasan

    Hi Manish,

    I had sold a residential property this month and following are details of my calculation and based on that I have few clarification, requesting to provide you valuable answers that help me decide for further planning

    Purchase Cost in 2002 Rs. 2200000
    Sale Price in July-2011 Rs. 8200000

    Cost of Inflation 2002 447
    Cost of Inflation 2011 785
    Indexation 1.756152125

    Indexed Purchase 38,63,534.67

    LTCG – Indexed 43,36,465.324

    20% of LTCG – Indexed Rs. 8,67,293

    Based on the above information, request provide some clarifications as below

    1) Since I sold the property in July-2011, I have time till March-2012 to decide to buy another residential property or to pay the tax of Rs. 8,67,293 in month of March-2012 and till March-2012 I could deposit entire money (Rs. 82, 00000) money I gained in the sale of apartment either in FD or in any account of my choice ? Is my understanding correct ?

    2) If I decide to purchase residential property before March-2012, the LTCG amount of Rs. 43,36,465 should be deposited in captial gain tax account and same amount need to be utilised for completion of construction before July-2014 ?

    2.1) Assuming I have paid the builder Rs. 40,00,000 till July-2014 and If builder does to complete the construction by July-2014 then I need to pay tax of Rs. 8,67,293 as tax before March-2015, is my understanding correct ?

    Please request you to provide your valuable answers, so I could plan accordingly.

    Thanks in advance.

    Regards,
    Sankar Srinivasan

    • Sankar

      yes, your understanding is correct .

      Regarding the last point , I suggest you take advice from a CA also , as this involves 40 lacs of rupees, i dont think you should shy away from hiring a CA , you will save much more than what you invest in CA consultancy :)

      Manish

  104. Pavan Mohan G

    Hi,
    I have some doubts about Tax on capital gains on Shares and securiteis.
    Q1. How i can know whether it is STCG or LTCG in case of shares and securities and other properties (Land, Flat, etc)?
    Q2. If i sell shares after 1 year from purchase, will there be any tax on capital gains? if so, How much? and same if i sell before one year.?
    Q3. What is meant by Tax befor indexation and after indexation? Can we opt for the option based on which tax will be lower?

  105. Sharad Kapadia

    An organisation owned property (bought before 1981, was sold in April 2011. What should be the calculated Capital Gain for sale of real estate? It is not a Trust but IT returns were filed as deemed trust and exemption due to the trusts is allowed by IT officer.
    While the price of this property has not increased in comparable increase in the price of gold, i.e. real value of Rupee has depreciated more than the indexation, are we logically entitled to claim on the grounds of real value rather than the IT Act provision?
    We are also going to purchase land from the sale proceeds of old property.
    Thanks.

  106. Pavan Mohan G

    Hi Manish,

    We have sold an Ancestoral property ( Site) in Bangalore . To avoid Capital Gain tax we are planning to buy another property . But the doubt is , which type of property should i look for. My options are :
    1. To buy a built house
    2. Agricultural Lands
    3. One property where in there is a big shop in ground floor and House in first floor

    Can i use any of these options to avoid capital gain tax as i am not interested in buying any bonds like REC as the interest is only 6%.
    I am more interested in option 3 as mentioned above. but i dont know wheather its considered as commercial or residential property.

    Need ur suggestions .
    Thanks
    Pavan

    • Pavan

      I think you can make the house on the land and it will be considered as residential only . leave the ground floor like that for some time , later use it commercially , a good idea would come from a CA

      Manish

  107. akhilesh

    hi, manish
    my name is akhilesh..main govt. employ hun..and my salary is 15000 permonth.
    my question is…maine 500000 property me invest kiya tha before 8 to 9 month..and that time the property value riched 1000000..so m responsible for capital gain tax..to main ye janana chahta hun ki main apna capital gain tax kaise save kr skta hun..aur jb main 10% tax slab me aajaunga to kya tb b main propety sell krunga to mughe income tax ke alawa cgpt tax bhi dena hoga..???

  108. S Karuna

    I undersand that the procedure for investment in residential property to save capital gains tax gains after selling a property is not available in case one is already having two residences already.Pls clarify on this.

    Also pls inform whether investment in Studio apartments qualifies for savings on capital gains tax.

    Thanks

    • S Karuna

      I dont think so that the rule you mentioned is correct . Where did you read that if a person has 2 properties than he cant save tax by reinvesing profits from real estate ?

  109. Rama

    Hi Manish,

    I have a flat in Bangalore for which interior is done by me in 2008. The property was book in Sep’2005 and registered in Mar’08. I started living in it from Jun’08. I have paid builder X amount for the basic flat, Y amount towards depost of BESCOM (electricity) and BWSSB (water and sweage), Z amount towards alteration and XX towards interiors.

    How do I calculate my Long term capital gains?
    Can I claim deduction towards my Y, Z and XX amount as an improvements?

  110. thomas paul

    Hi Manish

    I read you article on Capital Gain tax ( http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html ) , it was very interesting. However i am failing to understand few thing

    we purchased a house in 1993 for Rs 5 55 000 and we sold it in 2011 for Rs 13 00 000, can you tell me how how much Capital gains tax is incurred on this , the reason i am asking you is cause we want to invest this amount in in some secured debentures which gives 11% or FD which gives 10 %. instead of capital gain bond ( which give only 6 % ) .

    • Thomas

      I have a good news for you … You dont have to pay any tax , and on top of it , you can actually show some loss ! . Let me show you why

      the CPI for 2011 is 785 and CPI for 1993 is 244 . Which means your Indexed Cost of House = 550000 * 785/244 , which is 17.5 lacs approx .. So your COST is bigger than SELL Price .. and hence you made a LOSS of 4.5 lacs . This is long term capital loss , you dont have to pay any tax on the money you got by selling the house . Infact if you have some other long term capital gains , you can adjust 4.5 lacs loss from it .

      Manish

      • Sanjeev Kumar

        Hello Manish,

        My mother is a senior citizen. She recently sold 8 acres of inherited agricultural land. The market value of the land in 1981 was approximately 75,000 Rs per acre. Land was sold in July 2011 at a price of 7,50,000 per acre.

        1) Is there any long term capital gain she has to pay?
        2) She does not have any other income. If there is no capital gain to pay on the land, does she still has to notify or fill the income tax forms?

        Thanks.
        Sanjeev

        • Sanjeev

          1. Yes there will be long term capital gains tax just like any other real estate property . You can calculate it just like the article mentions
          2. Income tax is given on the income for the year , if she does not have regular income, it does not matter , she got income in this year .. so she pays tax .

          But there is one good point ,she can save tax by investing the capital gains in another “Agricultural land”

          Manish

          • Sanjeev Kumar

            Hello Manish,

            Thanks for your quick response.

            After calculation, I found out that my mother made a long term capital loss on sale of her agriculture land. Also, she does not have any other income as well. My follow-up question is: does she still has to notify the income tax office about the property sale OR need to fill any forms?

            Thanks again for your help.
            Sanjeev

  111. vasudev

    Hi

    I have purchased a property in 2001 and sold in 2009 and there is no capital gain on the property. while filing the incometax return this was not shown as there is no capital gain. now my question is that is it mandatory that this transaction is to be shown in filing of incometax return.

    vasudev

  112. harman singh

    Hello Manish,

    I have few questions that i did like to ask and it will be very helpful if you could answer the same.
    1) i have recently sold off agricultural land that i had inherited through many generations. Due to fast growing townships the land is just outside the muncipal limits (within 8 km outside mucipal limits). I am able to calculate the capital gain but my question is what type of property can i buy and since on a part of a land there was a marriage palace can i count in the money that i had invested to develop the palace to be deducted from capital gain.
    2) Also the money apart from capital gains will be counted as income for that year?

    Thanks a lot as your article was immmensely helpful !!! Cheers mate and keep up the good work

    • Harman

      1. You dont have to pay the tax if its marked as “Agricultural Land” . also when you sell it , you can save tax on the capital gains only if you invest in another “agri land” .. \

      2. Any thing other than capital gains , will be assumed to be your income .

      Manish

  113. samir

    Hi,
    For New Flat
    First Payment Date : 17/04/2010 : Rs. 1000000
    Last Down Pymant Date : 30/11/2010 : Rs. 0010000
    Last Loan Payment Date : 08/02/2011 : Rs. 1100000
    —————————————————–
    Total : Rs. 2200000

    Total Downpayment : Rs. 1100000
    Total Home Loan : Rs. 1100000

    Stamp Duty / Registration : 21/04/2010 : Rs. 130000
    Home Loan Mortage : 29/08/2010 : Rs. 020000

    Sold 2 Properties :
    Flat 1 : 12/12/2010 : Rs. 1150000 (Capital Gain Tax Rs. 100000 Bonds Purchased)
    Flat 2 : 20/08/2011 : Rs. 2100000 (Capital Gain Tax Rs. 500000 After Home Loan Closure Rs. 500000)
    —————————————————–
    Total : Rs. 3250000

    May I Make Downpayment Rs. 500000 so that no need to pay Long Term Gain Tax OR No Need To Buy Bonds ?

  114. Pooja Kadakia

    Hi,

    I have a question regarding capital gains from arts and antiques, are the tax slab the same for LTCG and STCG in this case as well.

    What are the deductions available for investment in arts and antiques.

  115. vilas

    Sir,
    I have two questions regarding capital gains tax on sale of house property :
    (1) Purchase price Rs. 3,81,000/- in 1991 – sale price Rs. 500000/- in fy 2010-11. how to calculate cg tax?
    (2)Purchase price/cost Rs. 40000/- approx. in 1961. sale price Rs.2700000/- in fy 2011-12. how to calculate cg tax?
    Thanks in advance.

    • Vilas

      1. in this case , its exactly same as explained in the article

      2. In this case you need to take the house value as per year 1981 , you will require a “valuaer” in this case .

      Manish

  116. Sirish

    Hello Manish,

    Thanks for excellent information.

    I have a simple remaining question. How do I know the “year” I purchased a society flat purchased in installments. First installment of Rs 1.25 lakh was paid in 2003 and after yearly installments, final one was paid to society in 2008 when I got possession. Total cost paid over the years was Rs 14 Lakhs. Which year do I use for cost basis for indexation and to calculate whether I pay Short Term or Long Term capital gains tax. If I sold the flat with in one year of taking possession, do I pay Short Term capital gains tax even though technically I made payments (and owned shares in society) since 2003.

    Thanks. Sirish

    • Paras

      Sirish, I think it would be the year in which the flat got registered/got the possesion irrespective of the year of booking the flat. So 2008 should be used for cost basis indexation. So you if you sell the flat in 2009, it should be Short term CG. Still visit some CA to get the clarification.

      Thanks!
      Paras

  117. Paras

    I have a flat which I am about to sell and expect to get Capital gains on it. It would be a long term Capital Gain as the property has been held for more than 36 months by me. My question is, if I can get a tax exemption on the capital gain in the following case:
    I booked another property (under construction) 30 months back and I have not yet received its possesion nor its registry is yet done. Some amount is due to be paid to the builder at the time of possesion and the registry amount. If I utilize the above money earned in Capital gain, then am I eligible to get the tax exemption even if the property was booked 30 months back?

    • Paras

      you yourself replied to Sirish the same kind of thing . what mattes is the LEGAL document date , no matter when you booked it , if you register the property on date X , then date X becomes you buy date .. so see how much tenure is between buying date and selling date. only then you can find out if its short term or long term capital gains

      Manish

  118. susanta

    I have purchased a residential plot in the month of Jan 1996 with a cost of Rs. 45,000/-. I construct a boundary wall with a cost of Rs. 25,000 in June 1996 (but no expenditure proof is available at this time). I intend to sale this plot for an amount of Rs. 16,75,000/- in Nov 2011. My questions are :-
    (a) How much I have pay tax for capital gain
    (b) How to save tax against capital gain
    (c) Where to invest the money so that i can save tax
    (d) How to calculate the tax. can you e-mail me

    • Susanta

      a) Depends on the cost price of the land and it would be the amount equal to registry amount ,also you need to index the cost .

      b) Yes , if you invest the money in another real estate within 2 yrs

      c) Same as b

      d) Search the net or meet a CA

      Manish

  119. A K Mishra

    can the existing housing loan availed in April 2010 be adjusted by my capital gain S/B account maintained in the same Bank Branch?
    Limit Sanctioned by Bank Rs. 1600000.00
    Date of sanction April 2010
    Amount availed till date Rs.650000.00
    Construction is continue
    Possession expected in Dec 2013

  120. Manish B

    Great article Manish. Still have a query. Is there a difference in computation if I sell my apartment within a 3 year period? I hear people talk of a 3 year period for applicability of CGT benefits…again is it 3 yrs from possession date or purchase/ agreement date? I purchased in June 2008 and took possession in June 2010. I plan to sell now…

  121. Krishna

    Good day Manish Chauhan,

    My query is the same as comment # 28. How is indexation treated for residential house purchased before 1981-82?

    House purchased in 1951 for Rs. 16,000/-
    Transferred to my Father by Will on 1956
    Sold by my Father in Oct 2011 for Rs. 95,00,000/-

    Please clarify. Thanks.

  122. shashank kapshikar

    i have purchase aflat in march 2011 and want to sell in december 2011 or jan 2012. oteother than builders cost i have incurred expenditure on REGISTRATION, STAMP DUTY VAT AND SERVICE TAX , FOR COMPUTATION OF PROFIT(capital gain ) WHAT WOULD BE COST OF FLAT, IT IS EITHER ONLY BUILDER’S COST OR OTHER EXPENDITURE WILL ALSO BE CONSIDERED. waiting for reply thanks.

    • Shashank

      Note that in your case there will not be any LONG TERM CAPITAL GAIN , all you need to do is SELLING PRICE – COST PRICE , where SELLING price is the price at hwich you sold and the cost price would be builders cost + registration cost + stamp duty . what ever is your profit will be added to your income and taxed at your tax slab rate . this is because indexation is applicable only after 3 yrs

      Manish

  123. Prabhat Sikdar

    Hi Manish

    I want to know if NRE’s can apply in FMP’s and after the FMP’s mature will the proceeds be credited in NRE account. Also if there is any tax applicable after 365 days which means of long term capital gain.

    Also kindly let me know if E- Silver sold after 4 years attracts tax, if so will it be after indexation.

  124. Sridhar

    Hi

    I am still confused whether Capital Gains tax on a Property (House, Land, Comm Property) can be paid considering lowest of the two i.e. with indexing(20%) and without indexing options(10%).
    Typically when there is huge appreication, paying 20% tax with indexing will always be higher than paying 10% tax without indexing. So without indexing would be the way to go.

    But I am unable to find a link to the tax section which explicitly states that we can choose among the 2 options.

    Can you pls put the link here, where it says the above.

    Also i checked with 2 tax advisors (not sure of the repute) , and they said 10% is not correct, we have to pay 20% on indexed cost, if its a sale of real estate after 36 months of aquisition.

    Could you pls clarify

  125. Sudeep Jain

    Hi,

    Suppose I have bought a flat @ 25L via Home Loan. For 3 years I have paid home loan interest i.e. 5L (via EMI). After these 3 years the flat cost @ 40L. Now I would like to sell this flat so while calculating the Purchase price can I consider the home loan interest (5L) as well i.e. Flat Purchase Price (25L) + Home Loan Interest (5L) = 30L, because I see home loan interest as a loss on property. Will I get this as a benefit/rebate in tax calculation?

    Thanks
    Sudeep Jain

    • Paras

      Sudeep, 5L cannot be considered to include in the cost while calculating it for the Capital Gains purpose. Obviously, its a loss on house property, but this deduction has already been taken u/s 24(b) for which the limit is 1.5L for self occupied and no limit for a rented property. You cannot claim benefit twice on the same loss.

      Thanks
      Paras

  126. ram

    What is the date of purchase of the real estate property? Is it date when the agreement is signed between the builder and the purchaser or the date when property is registered at the registration office? Are short term and long term capital gains rules are same for Resident Indians and Non Resident Indians/ Persons of Indian Origin Card Holders (PIOs)?

  127. harry

    Hi i wanted to ask something diff from the topic above. I have sold my ancestral property and the registry amount is X which is same as the govt records for that area( so no capital gain). If i keep that amount and do not buy land for it then it will be considered as my annual income but if i buy the NHAI bonds issued on dec 28 then do i still have to pay the tax on the X amount ? or the tax will be exempted on the X amount since i have invested in these bonds ? Thanks in advance !!

    • Harry

      Note that these bonds are not going to give you any tax benefit . these are not those NHAI bonds which give you capital gains exemption rules , those are different bonds from NHAI .

  128. Sujitkumar

    Hello Manish,
    I would like to know about the capital gain and the tax i have to pay if any. I booked 1 2BHK under construction apartment on 1st Dec 2007 and got the allotment letter. Then we registered the agreement on 21st Dec 2007. After registration I paid FULL balance amount by loan in Jan 2008. I got the possession of the same property in May 2010. Now in Jan 2012, I am planning to sell the apartment and would like to know the capital gain after sell will be considered as Short term Capital Gain OR Long Term Capital Gain? Do I have to pay any income tax?, if I reinvest the full capital gain immediately to buy the new apartment for my own stay?
    2nd related question is, how the Period of Holding is calculated, is it from date of Registration or from date of actual possesion.

    Please advise and thanking you in advance.
    Regards,
    Sujit

  129. Sunil Kumar

    Hi Manish
    I am working in the MNC in India. Company has given the option of ESPP. I am purchasing the company stocks from last 4 years. These stocks are purchased in USA market. Now i wanted to sell out my stocks. I wanted to know the following things:-

    1. Is Shares purchased 1 year back should be considered as long term or not? Is there any tax involved on it.
    a. Is this is considered as long term capital gain?
    b. Is this long term capital gain can be used to purchase a house to offset the
    income tax?
    c. These stocks are purchased in every quarter (3 month). Some quarters are
    having profit and some having loss. How to calculate the amount to
    investment for house to offset tax.

  130. Achal Malhotra

    Excellent blog for lay-persons.
    My question: I acquired a flat in a Group Housing Society for Rs 10 lacs; sold it in Dec 2011 for Rs 67 lacs and within a week purchased a PLOT of Land for Rs 98 lacs . Am I required to pay ant LTCG tax?
    Also I plan to dispose of another flat and propose to use bulk of the sale proceeds for constructing a house on the plot of land purchsed > What impact, if any, will the second transaction have on the first transaction?
    Thanks in anticipation. Achal

    • Himanshu Goel

      Capital gain tax is exempted in following cases:

      1.If the proceeds from sale of a property are invested back in property within 3 yrs of the sale which stands true in your case.Hence no LTCG on your first property.

      2.Now about your second plan, the capital gain arising from second sale have to be utilized for construction of the new house within three years from the date of transfer of the second property.

    • Achal

      No you dont have to pay any long term capital gains tax, if you had hold the first house for atleast 3 yrs ..

      Now coming to your question, as you are planning to make two houses (one by purchase , which you already did and second one by constructing it) , I think what you can do is claim the deducations on first house and enjoy the unlimited interest deductions on second house , assuming you took home loan for that

      Manish

  131. K. Singh

    Dear,

    I have a residential house purchased in 1975 by my deceased father. My mother is living with me. Please advise if my mother sell the property and gift me the sale proceeds and if I can purchase another residential property or construct a house from the sale proceeds gifted by mother to avoid LTCG.

    Furthermore, if my mother will the property in my name, can I use the sale proceeds of the property to purchase another residential property or construct a house from the sale proceeds to avoid LTCG.

    I would appreciate your reply.

    Regards
    K. Singh

    • K singh

      Right now , who is the owner of the house , is it your mother (as per WILL) , else you both are the owners . You can sell it off and use the proceeds to buy another house .. there will be no LTCG

      Manish

  132. Sunita

    Dear Sir,
    I am govt. employee.My salary is 30,000 p.m i.e.3 Lakhs 60 thousand p.a.
    In jan,2010 I bought a flat @ 6 lakhs (5 lakhs from HDFC and 1 lakh from personal saving).Now I sold the flat in Jan 2012 @ 9 Lakhs.I have used these 9
    lakhs in repayment of home loan i.e 5 lakhs and rest of the 4 lakhs used in buying the new flat. which i have bought @ 17,50,000 in the next week of selling the first flat.Rest of 13,50,000 arranged from HDFC bank.Now, If i am taking my salary as income then I will have to pay no tax for current financial year as i have invested One lakhs in LIC and bonds etc and payed the home loan interest. But Now after reading your discussion I understand that I will have to pay STCG.
    Now,please help me for following questions:
    1) What will be my total income for tax.Is it including my salary and profitable amount both from selling the flat or only the profitable amount from selling the flat?
    2)What will be my taxable income and taxable slab or %(percentage) for paying the tax?
    3) Approx how much tax I will have to pay for current financial year?
    Please help me. Thanking you in advance.
    Thanks,
    Sunita.

  133. vallari

    are the registry charges included in the cost of property?

    the property was in the name of my parents and after their death my siblings made the gift registry of the same in my name will these registry charges be also included in cost of property

  134. My father bought a flat in 1974 for Rs 44000.If he now sells it for Rs One Crore Thirty Lakhs ,what will be the LTCG tax.There is no CPI available for 1974-75
    2. Should he pay tax with indexation or without indexation
    3. He is 97 Years old

    Thanks

    • Arun

      IN that case you will have to appoint a valuer who will find out the cost of the property on 1981 and then that will be the base price . Also the tax will definately will be there , but that can be avoided by investing in a new property !

      Manish

  135. DEEPAK

    Hello Manish,
    I would like to know about the capital gain and the tax i have to pay, if any. I booked one 3BHK in a new builder project under construction linked plan in 2008 and due to undelivered status of the project, sold the same in December, 2011 on the same price which paid by me till December, 2011 (37 Lacs). So, no registration happened but only payments gone through Construction Linked Plan. Now. with this 37 lacs, bought a new apartment (also construction linked plan) for 41.60 Lacs. The possession will be offered in December, 2012. Do I have to pay any income tax since I have already reinvested the whole amount (plus along with my other savings of 4.60 Lacs)?,
    Thanks in advance
    Regards,
    Deepak

  136. Naresh

    Hi Manish
    Thanks for all the info you posted.
    We booked an apartment in 2006, got possession in 2012 and if we sell in 2012, I have following questions-
    1. is it long term or short term gain?
    2. how to calculate the indexing costs for the amount paid from 2006 in installments?
    Thanks / Naresh

  137. MEHUL

    Dear Manish,

    I have gone through this whole forum for the first time today. Remarkable experience…. with all the new queries posted each day. God bless you. Keep up the good work.

    Now, my small query to you…. I have purchased an apartment (under construction) this month with a price tag of 40 Lacs and the possession is going to be likely in Q3 2012 (around September). Now moving on to next FY in June 12 I probably may sell the property and will get around 60 Lacs price. Please let me know how much I would pay STCG. Is it going to be indexed or without index. What is the difference between two in short term. If in case, with 60 Lacs amount, I would go for another under construction linked plan apartment within a month of selling, then will I be able to save total tax on my capital gains. Please provide some best practices in order to avoid maximum tax on capital gains in short term.

    Also, I heard that I also need to pay the advance tax in the month of June itself once property sold otherwise the remaining months will be charged @1% interest. Kindly also put some light on it.
    Mehul.

  138. Rajesh

    I had purchaged house in 2003 at Rs 4,80,000/-. Now in 2011 January,I have purchased one more house for Rs 22,00,000/-.But I paid only booking amount of Rs 3,00,000/-in 2001 January.The registration for the new house will be done in 2012 May. I would like to sell my old house property in July’2012 for around Rs 17,00,000/-. Can you please help me to know whether the tax on capital gains by selling old property can be exempted by purchaging my new property.

      • Rajesh

        Thank you Manish,

        Your reply in this regard is verymuch appreciated.
        Now can you help me know some more queries regarding the new transections?

        I will sell my existing property in July’12.The amount I ‘m going to receive Rs 17,00,000/-.
        For new property(Total Rs 21,00,000/- including stamp duty),I have booked in 2011 Jan and booking amount of Rs 3,00,000/- is already paid to tyhe builder. And registration of the new property will be done in May 2012. Can you please answer following queries:
        1) Should I deposite the amount in a perticulat bank account and the checked to be given to builder as and when required as per construction stage?
        2) To get the tax rebate, when I should complete the payment to the builder for the new property?

        Regards,

  139. Vijay

    We have purchased 500 shares at very low rate in between 1978-1993. The company is delisted now with price of 4000 each. (Reverse Book Building Process). I want to ask whether LTCG tax is applicable or the amount is TAX-free?

  140. sagar

    hi,
    my father sold his ancient house for 115000 in april 2012 propery purchase in late 1965 by my grand mother which transfer on my father name in 1998 via civil court digree (other process to name house on ur name without and registration fee) now how much tax we had to pay, we even spen lot of money to repair that house time by time but how to show how much we spend

  141. Rajesh D

    Hi Manish

    Your articles are very informative and sincerely put across.

    I have a small query.
    I had booked my flat in Pune in Apr 2008 and Registered in Nov 2008.
    Now. I have received possession in March 2012.

    I would like to sell at the earliest and buy another next door, house in the city I stay.
    When can I sell it to qualify for Long Term Capital Gain.
    Would it be 36 mths from Nov 2008 or from March 2012.

    If I sell in April 2012, and if it is Short term CG, I can reinvest in another house under section 54.

    Thanks in advance.
    Regards
    Rajesh

  142. Naresh

    Hi Manish (Repeating my question)
    Thanks for all the info you posted.
    We booked an apartment in 2006, got possession in 2012 and if we sell in 2012, I have following questions-
    1. is it long term or short term gain?
    2. how to calculate the indexing costs for the amount paid from 2006 in installments?
    Thanks
    Naresh

    • Paras

      Naresh, regarding the point 1, its LTCG or STCG, would depend on the date of registry of the flat. So if you got the possession in 2012 and assuming you got it registered in 2012, it would be a STCG if you sold in 2012 itself.
      Regarding your point 2, If you got it registered in 2012, then I think indexing would not be required, as the cost registered would be used for CG purposes.

      Thanks!

    • Rajesh D

      Hi Manish

      Is the 3 yrs period for LTCG from
      date of booking(first installment), or
      date of Registry or
      date of possession.

      Thanks

        • Girish Hodlur

          Hi Manish,

          Are you sure its the possession date. I was told the date of purchase (generally the date the agreement gets registered) is to be taken for all calculations purposes. I checked a couple of websites which show the LTCG calculations and eveery one of them talked about the date of purchase rather than the date of possession.

  143. Dnyaneshwar Somase

    Hi Manish,

    I purchased a Flat costing Rs 4.75 L in year March 2003 on my wife name, she is housewife, same flat, we sold in Rs 17.40 L in May -2012. I paid housing loan interest around Rs 2.0 L for around 8 years. I also paid stamp and registration charges Rs 40000/- + Electricity charges Rs 40000/- during purchase. For calculating the purchase price, whether stamp duty & Registration charges, electricity connection charges as well as Interest paid on Housing loan considered for calculating purchase price of flat. So, i can calculate the indexed purchase price on considering above factors( i.e. Stamp duty& Registration, Electricity connection, Interest Amount on Home loan, …etc)

    Secondly, I bought a new flast costing Rs 40 L with registry( Jan-2011) on my name, with home loan of Rs 30 L with joint Home loan account with my wife. Completion of flat is expected in Oct-2012, I have to balance amount Rs 10 L from Home loan account before completion. Whether I can use flat Captial gain amount received from above flat of wife name, to pay balance amount to new flat.

    Please reply in details.

    Many thanks in advance.

    Dnyaneshwar Somase

  144. Dnyaneshwar Somase

    I currently have a buy to let flat in my sole name/mortgage. I want to transfer the property to my wife name.

    Are there any other implications e.g. stamp duty, I assume not as it’s between husband and wife?

    Many thanks in advance

  145. vikram

    I plan to sell my house, which i bought in 07-08 for price of 11 lacs. Not my selling price is 12 lacs. which means on CII, there is a loss of 3.6 lacs. And i want to show this in my returns to save tax on salary.
    Can i ask my employer to take this calculations and accordingly deduct tax.

    Secondly, i want to buy a new house from the proceeds. Is that ok, with the above points

    • Vikram

      It can be adjusted with only a long term capital gain , not from the salary . So if you have any kind of GAINS , then this can be adjusted . If you do not have it in this year .. better mention it in the tax return, so that you can claim it later .

      You can buy the next house using this , but there is no taxation angle .

      Manish

      • vikram

        Hi
        When u say, mention it in returns, i didn’t understand.

        Doesn’t it get adjusted with total taxable income ?
        And how can i claim it later on ?

  146. mohamed tahir

    Dear Manish,

    Very helpful tips from your end.
    Could you please help us for calculating the LTCG? our company had purchased 32.08 Acres of Agricultural land in 1982 at Kushalnagar, valued at 16,87,750 as per BS. We now sold 8.08 acres for 622 lacs including Buildings. what is the capital gain payable and how to avoid taxes and any tips to reinvest the same? my mobile no. 98459 18669.

  147. RAKESH

    I HAVE SELL PLOT THIS YEAR.PURCHASED IN 2000.CAN WE INCLUDE COST OF BOUNDARY WALL AND TEMPORARY STRUCTURE MADE ON IT (BEFORE SELL) WHILE CALCULATING CAPITAL GAIN.

  148. Srinivas

    I am curious to know how pending loans are treated when i sell a house.(Hypothetical).

    I puchased a house in 2008 Jan and sold it in 2013 April(after Completing 5 years).
    I invested 26 lakhs for the house(10 loan from father and 16 self)
    By the time of sale, i repaid only 5 lakhs of loan. I sold the huse for 4500000. Would like to know what is my CG. specifically, where there will be any impact of my pending loan.

    Thanks

  149. Kiran Patil

    Dear Manish
    I was read all the above Q&n to find out my query that is
    My father was purchase a house in 1996 at the cost 1,60000/- and now in July-2012 I was sell that house at the price of 7,70,000/-. And now I want to invest the entire amout in resel property which is 6 years old.
    Then in that case can I exempt. from Long term captial gain tax?

  150. S Singh

    Hi.

    I have an apt for 4 years which I want to sell now and have a few questions –

    1. The cost of the house was 18 lacs (I have receipts from builder) but the registeration was done at 12 lacs as per builder’s letter. What will be the cost of acquisition in this case? 18 or 12 lacs?

    2. I did wood work and put electrical fittings of 2 lacs on getting possession of the flat. Is this included in the flat cost?

    3. I paid 2.3 lacs as Interest on home loan till possession date. Is this included in the flat cost?

  151. Maria

    Manish, my mother sold a couple of properties this year:
    1. plot of land bought 2005, at 6lakh (registered@3L), sold 2012 for 65L (regd for same)
    2. House in my deceased father’s name, constructed in 1993 for Rs.10L (site+constr.), sold 2012 for 49L.
    Q: since the house was in my father’s name, seller was listed as mother+4 children. Money was distributed 10L to each member, so do all of us have to work out LTCG separately? Mum & I are buying an apt with her profit from the site plus my share of the house sale- will registering in both our names be enough to claim exemption from tax?

  152. Manyam

    Really very good information Manish, Btw is there any reliable link to refer latest CII values from inception.. seems above list until 2009 only..

  153. Sumit

    Hi dear All,

    I have a unique problem in front of me. in August 2011 i bought a house and want to see it in August 2012 without even taking possession of the property. i have gained a very small amount (alomost nil) in this transaction.
    1. Do I still need to pay Short Term CGT if yes then how to calculate the same.
    2. Can I take the proceeds in cash and deposit the same in Bank without any harassment by Banks.

    Pl reply ASAP…

    BR,

    Sumit

    • 1. If there is any profit, then you need to add it in your income for the year and pay tax as per slab

      2. That has nothing to do with anything , see how you want to get paid by the buyer , it is between you and bank

  154. bpn

    sir,
    1974 purchased ind.unit at Rs.44000/00;improvment chgs.211300/00 in 99-00 plus 175500 in 06/07;spent;
    Sold 11-12 net 9131000,what is c.g./c.g tax payable.
    Thanks.

  155. Mohammed Alam

    Hi

    I had booked a flat at the project launch of a builder in Jan 2007. I paid a total of 50 lakhs over the next 2 years i.e till Jan 2009 (25 lakhs each year). This included all costs except the registration and stamp duty charges. I did not register the flat and the same remained unoccupied till I sold the same (assigned my rights) in May 2012 for a total consideration of 58.5 lakhs. My queries are-

    1. Will this be taken as CG/CL because the property was still unregistered ?

    2. Would this be taken as any normal business transaction wherein I invested 50 lakhs and made a profit of 8.5 lakhs ?

    3. If taken as a business transaction, will any indexation come into play ?

    Thanks & regards.

  156. jatin sehgal

    Hi, I purchased a property in May 2012 for 37 lac. Now i want to sell the same and price i m getting is around 50 lac. Can you please suggest me what will be the short term capital gain tax? and If i want to do trading in the property, what will be the tax implication?

  157. Supreet

    Hello Manish,
    The information posted on this page is really very helpful and simplifies the way one can explain CG calculations.
    My only question is, I plan to sell a Flat this month (Sep 2012) which was purchased in 1994. In order to calculate the Purchase cost with Indexation, what will be the CII for the current financial year (2012-13). Has it been released by the Govt., and if not when is it released in general.
    Thanking You in advance.

  158. DP

    I had purches flat in Dec 2010 by 40 lac and and sold in May 2012 by 45 Lac In the next month i buy the new flat on 40 Lac. Then how much capital gain i need to pay?

  159. Mandal

    Hi,
    I have bought a house in pune in 2005, on 6 lakhs. 6 lakhs was taken as a home loanfrom icici bank. Now in august 2012, I have paid 2.5 laks to bank to foreclose the loan. I am planning to sell the house in Ocotober ,2012 for 20 lakhs. Can you please tell me the tax I need to pay. can I get any exemption for the amount 2.5 lakh spent for foreclosure. I am paying 50000 as brokerage to sell the house and 25000 for NOC for co-operative housing society.

  160. Prashant

    Hi Manish,

    After lot of searching on the internet, let me complement you that yours is one of the easiest and active blog over the net…so good work for novices like me :-). My query is as below

    Background:

    1) Bought a flat @ 31.50 lacs (June 2010),
    2) Selling Price @ 51.50 lacs( Sept. 2012).
    3) Capital Gain = 20 lacs. (assume after indexed calculation)
    4) If I am again planning to buy a new house of 40 lacs now (within 2 months of selling above property), then does it mean I will have to pay NO tax since I am reinvesting my Capital Gain of 20 lacs back into the real estate
    or
    Will I have to pay tax, as I need to show the entire investment of 51.50 lacs collected by selling the above property.

    Regards,
    Prashant Chauhan

    • Prashant

      You will have to pay tax on 20 lacs profit, because the capital gains benefit is available only when the house is sold after 3 yrs of possession , but in your case its less than 3 yrs !

  161. anil kumar k

    dear manish
    i purchased a flat in hyd and registered it in jan2010 for rs 40lacs. i intend selling the flat after jan2013 for 65 lacs.what is capital tax gains. i am planning to construct a house nearby. need tips to pay nil tax. regards anil

  162. sachin

    hello,

    I want to know property gain tax on my beow deal.

    1. In 2009 I bought property in my hometown for 12,65,000, after buying that i did over 2 lacs of expenses in that property.
    2. Now i’m selling it to 32 lacs within 1 week or 2.
    3. By using that money i’m buying a flat in pune for 34 lacs. in a month. pune property is finalised, no payments done.

    How much tax i need to pay ?

    Thanks & regards,
    Sachin Tikore
    98810 63750

  163. sachin

    Hi manish,

    Please help me to calculate the property gain tax on below deal

    Property purchase in 2009,
    Purchase price 12,65,000
    selling property in 2012
    Selling price 32,00,000

    New property buying in 2012
    New property cost 32,00,000

  164. Chinmay Patel

    Hi,
    I purchase commercial property in 2006 in Rs. 9,40,000/- on this property I take Loan Rs. 14,50,000/-… Now, I sale this property in 2012 in Rs. 22,00,000/- .
    How can I save tax???
    Can I calculate interest on that Loan ???

    • It does not matter what is the loan amount , all you need to see is the buy and sell price only . Use the indexation method given in this article and find out the capital gain part, if you invest that much in some other real estate , then you can save tax

  165. suresh

    Hi Manish,

    Not everyone would like to share the knowledge or provide basic information to public. Which you are doing t, my sincere appreciation for your efforts.

    My query

    I bought a house in the year 2005 for 10 lacs and selling it for 25 lacs in 2012(oct).

    #1 For the financial 2012-2013, whether the same 10%( wihout index) and 20% with index is applicable. or Should i consider my 30% tax bracket to calculate the LTCG tax.

    #2 Few auditors claim that we have a excemption upto 23 lacs, meaning any sale within the limit 23 lacs will be exempted from capital gain. If this is true then i have to calculate my capital gain only for 2 lacs

    #3 Till now i was under the impression, i need invest the sale proceeeds only in a existing built house. But from this site, it looks like i have to invest in a new property(Land or house)

    Please clarify.

  166. Kumaran R

    Hi Manish
    I have Purchased a flat in 2004 @ 15Lakhs ( 12.5 Lak Home Loan taken for this property ). I sold this in 2012 @ 73.5Lakhs ( Paid 9.4 Lakhs to the Bank as Outstanding Pricipal ). So Net in hand for me is 73.5-9.4 = 64.1 Lakhs

    How do I calculate Capital Gain because though the sell price is 73.5 Lakhs, what I recieve in hand is Rs 64.1 Lakhs. So what will be my capital gain ?

    Thanks..

  167. vijay patel

    can i gift to my house property ( approx value 10 lakhs ) to my elder brother , if yes what kind of tax liablity to my side and brother side ,this propety purchase in 1997 value Rs 191000 and renovatin & constcution cost 325000 in 2002 that time jont family after that i m purchase new house in 2007 name of my wife ,(Rs.9 lakh, my wife also teacher ) and today i want to sale this property to my brother this property vale of 10 lakh but i sold to my brother only 5 lakh can it possible if yes how much tax libilty to my side and othewise i not sold propety to my brother can i gift to my brother ,if yes how much tax liablity my side .

  168. Suddeshna

    Hi Manish

    Tax without/with indexation @10% or 20% applies on capital gain right?How can 10% of 428826 be 85765 for taxation without indexation?

  169. Mudaliyar

    We are paying EMI for my flat approx 30000.00 which is includes approx 28000 interest 2000 principal. Our total income is approx 3 laksh each person per annum, (Total 6 lakhs). However the join propery EMI is paying by both candidates My wife and my self. We do not want avail the interest excemption as our income is not taxable. Can we add this interest into our Flat value (asset) without using our exemption?

  170. Narayan

    Dear Manish ji,

    I have certain queries with regards to Long Term Capital Gains arising out of selling residential properties and buying new residential properties. The case is as follows:

    Residential Property A – Father, Son 1, Son 2 (Joint Owners)
    Residential Property B – Father, Son 1, Son 2 (Joint Owners)
    Residential Property C – Father

    We wish to sell these 2 residential properties, namely A & B which are in our joint names. We will be eligible for Long Term Capital Gains as the period is more than 3 years now.

    I have the following questions:

    1. We intend to buy 2 new under-construction properties in the name of each son.
    2. We intend to buy 1 ready-to-move property in the name of father.
    3. Is the time-frame for the possession of the under-construction 2 years or 3 years from the date of sale of old homes? How is the possession date calculated? Is it mentioned in the agreement done with the builder or is there another way?
    4. What happens to LTCG exemption if the builder delays the possession?
    5. Since the father also has another residential property C, can he buy another residential property to take benefit of LTCG exemption under section 54.

    Thanks.

  171. Raj S

    Manish –
    I own a plot since the 1970s. We built on it in 1990 through a builder, and got 1 flat + some compensation for it. The plot is still in my name.
    I want to sell the flat + title of the plot (even though FSI is consumed). Calculating the indexed value of the flat is not a problem since I had got a valuation done in 1991 for wealth tax reasons.
    I am getting conflicting reports on the indexing of the land, because the land is on 998 year lease. Can I index leased land, or does the entire compensation attributed to land have to be reinvested?
    Thank you.

  172. Rajagopalan

    Dear Manish,

    CPI starts from 1981. What would be the CPI for property purchased earlier than 1981, Say 1970?
    Thank you

  173. Sunil

    Hello Manish,
    I purchased my property in 2005 and i sold my property in 2012. Meanwhile in Nov 2011 , i purchase another propery. Can i get exemption on capital gain?

  174. soumya

    Hi Manish,
    I am investing in long term debt fund, and have been continuing for more than 1 year. I don’t have any plan to withdraw the money and wil keep it invested for next 5-6 years. I have following 2 questions:
    1. Like FD, should I pay income tax every year or I should pay it during redemption.
    2. For Rs 1 lac, if I gain 10% return per annum, how much tax should I pay after 5 years, I fall under 30% tax bracket.

    Thanks for your reply.

  175. Wriju

    Hi Manish,

    The excel file hosted on zoho is really helpful, thanks for sharing it.

    I wanted to put in the CPI figures from 2009-2010 onward. Any known sources?

      • Wriju Bharadwaj

        Hi Manish,

        One question regarding taxation with v/s without indexation which one applies to cap. gains from sale of residential flats?

        Plus are there any specific benefits for senior citizen women.

        On a separate note, I noticed the sheet on ZOHO has some missing/hard-coded values, I have updated a copy of the sheet but
        a. I don’t whether the calculations (post changes) are correct
        b. how can one update the copy on ZOHO so that everyone on this site can take benefit???

  176. pattni

    My father gifted me a flat in 2011 April. The stamp duty was calculated on Rs 3300000 from RR ,as the building is 40 years old. Actual price at the time was 80 to 85 lakhs. Now a flat is over 1 crore. It is going to go for redevelopment. In five years time the price will be much much higher. How will my capital gain tax will be calculated ? Can i avoid capital gain tax, as i am a British citizen and the flat has been gifted to me.

    Thanks in advance for any guidance.

    • No you cant escape the tax like this .. its very simple .. you bought it at 33 lacs and then you will sell it at some PRICE .. so capital gains tax has to be calculated just like its shown in this article

  177. VASUDHA

    dear sir,

    I am the direct allottee of this BDA property. Got allotted in 28/03/2003 but got registered in my name in 19/05/2005
    PFA the sale deed, allotment letter and khata for your reference.

    There are no consturction or structure on this property, It is still a vacant land.

    Currently the property is under GPA in my dad’s name .
    I found a buyer for this property. He has agreed to pay 1.51 crore for this property. According to him the current book value of this property in this area (SMV Layout 3rd block) is Rs. 1300 per sft
    The book value may come around 50lakhs. So he is saying he can register the property upto 50 lakhs and remaning he will pay by cash.

    Planning to have the sale agreement by mid feb 13 and complete the registration by April 2013.

    I have following questions:
    1) If I complete the registration by April 2013, what will be the capital gains on this property?
    2) Since I have provided GPA to my dad, will the sale proceeds will come to me or this can be handled as my dad’s transaction?

    Thank you

  178. Gopal

    I booked an apartment in 2005 and it was handed over to me in April 2010. However the registration took place only in March 2011. If I sell the property in April 2013, will it be treated as LTCG or STCG?

  179. Rohit P

    Hi Manish
    I have purchassed a flat in Bhopal in Dec’2009 in 11 lac including registree & all, and got the possesion in Sept’2010. Now I want to sell this flat in 18 lac in March’13 and taking one new flat in march’13 itself of Rs 20 lac (Including Registree & all cherges). for which I will take loan of Rs 15 lac & 05 lac will be a DP (including Registree).
    1) How much will be capital gain?
    2) I still have to pay tax, in case if i bought a new flat.
    3) Is it LTCG or STCG.

  180. Nitin

    Hi,

    I purchase property in May 2007 for 17,67,454 (inclusive of Stamp duty, Registration fee and Brokerage), now i have sold the same in Jan 2013 for Rs. 40,00,000. I am not purchasing Res. Property. I want to utilize that money for my personal use. how much Tax i have to pay? and if i want to put in NHA bond how much i have to put?Can i purchase property worth 12 Lakhs and use remaining money?

      • Nitin

        Thanks Manish for quick response, I have calculated capital gain as per your instruction. But 2 CA’s are saying 2 different thing so i am confused. My Capital Gain comes to 12,67,022/- and Tax with Indexation comes to 2,53,404/- and without indexation comes to 2,23,255/-, so my 3 questions are 1)for paying tax i have to pay 2,53,404 or 2,23,255/- . and (2)if i want to put money in NHA bond how much ? is it 12,67,022 or 2,53,404 . (3)Instade of paying tax can i buy a property worth 12 Lacs and use other money for my personal use. I have to take decision fast because if i don’t buy property then i have to pay advance tax before 15 march. Please help.

          • Nitin

            Thanks Manish for your quick reply, really appreciated. I have got the same reply for Q1 & Q3. Are you sure that your Answer for Q2? I am not doubting, but my CA says i have to put 12, 67,202 in NHA Bond?
            Please Clarify

          • Nitin

            Thanks Manish for your quick reply, really appreciated. I have got the same reply for Q1 & Q3. Are you sure that your Answer for Q2? I am not doubting, but my CA says i have to put 12, 67,202 in NHA Bond?
            Please Clarify

  181. Amit

    I bought a fliat in Mumbai in Jan2012 for 24 Lacs. Now in Apr2013 I am selling it for 32 Lacs and I’ll be investing this amount imidiately to buy another flat in mumbai for a price of 60 Lacs. Do I need to pay any tax?

  182. Rohit P

    Hi Manish
    I have purchassed a flat in Bhopal in Dec’2009 (Registree Date) in 11 lac including registree & all. Now I want to sell this flat in 18 lac in March’13 and taking one new flat in march’13 itself of Rs 19 lac (Including Registree & all charges) for which I will take loan of Rs 15 lac & 04 lac will be a DP.
    1) How much will be capital gain?
    2) I still have to pay tax, in case if i bought a new flat.
    3) Is it LTCG or STCG.

  183. Vikas

    Hi Manish,

    I purchased a flat in Pune in FY 2005-2006 for Rs 11.2 lac and sold it in the FY 2012-2013 for Rs. 40.95 lac.
    I purchased another flat in Pune itself in the FY 2011-2012 for 53 lac on loan which was prepaid in Jan 2012.(The second flat was purchased while I was still holding the first one)

    Now my questions are,
    1. Is the Long Term Capital Gain Tax still applicable to me. If it is applicatble, please suggest me the investment options.
    2. I possess another flat in Nasik since year 2005 (which makes the number of flats I am holding at the time of above flat sale – 3) Is LTCGT related to number of properties I am holding?

    Thanks and regards,
    Vikas
    [email protected]

  184. Anand Shivarkar

    Hello Sir,

    I have a bought a land in 2008 for 1.20 lacs and sold in 2013 for 2.50 lacs so please tell what tax amount i have to pay as capital gain

  185. Vipul

    Hi..
    I have purchased a RESIDENTIAL property in Nov. 2002 worth Rs. 3,92,130 (including stamp duty and etc.)… i sell this property in Oct. 2012 for Rs. 12,50,000….. the indexed cost is near about Rs. 7,50,000…… so my
    LTCG is Rs. 12,50,000-7,50,000 = 5,00,000
    Now i have purchased a COMMERCIAL property in feb. 2013 for Rs. 6,50,000 (including all the expenses)…
    Now the Question is… Is there any tax liability for me..???

  186. SUBHASH SHUKLA

    Sir,
    iI have purchased house in 7 aug 2004 Rs.532000/ (with stamp duty)
    And construct first floor in 2010 cost Rs.500000/- and bank loan taken for 400000/ and 300000/ to meet expenses. now i am selling house Rs.2300000 in mar-2013

    Is there any CGT?
    And how can i save it?

  187. Vijay Goyal

    Sold a residential plot for 30 lacs on 1.3.2013, purchased at 1.50 lacs on 1.9.91. Whether tax without indexation shall be 10 % or 20 % , as it proves to be cheaper

  188. amitk

    Hi,
    I bought a house in Mumbai in Feb2012 for 24 Lacs excluding 1.30 lacs of stamp duty/registration, 40,000 of brokerage and 12,500 of society transfer. So the overall cost of the house is 25,82,500.
    Now in Apr2013, I want to sell it for 29.90 Lacs due to personal reason and I’ll be investing this amount immediately to buy another flat in mumbai for a price of 65 Lacs.
    In these peiord I have already paid home loan interest of 2.30 lacs, so the actual income i earned technically is 1,77,500.

    My CTC salary is 7 Lacs. I am worried about paying heavy tax for next year as I’ll be buying new house which is costing more.

    Also, my father was the co-applicant in this property, however he is not working now and do not file any tax returns. He funded me 2.50 Lacs to buy the property.
    Will his contribution be considered for tax savings?

    Please guide me the best possible way to pay less tax.

  189. J N GANDHI

    Pl calculate capital gain and tax there on.
    Purchase Year : 01.10.2000
    Purchase amount :385000
    Selling Date :25.03.2013
    Selling Price :60,00,000/-
    New Purchase :45,00,000/-
    Date :30.03.2013

  190. Prasad

    Dear Manish,

    I am a senior citizen, entering 65 in this fin year. I was allotted a flat by VUDA ( vizag urb dev authority) for a consideration of 1.6 laks tentatively in Jan 1991. The flat after completion was registered in my favour, after cost escalation, for Rs. 3.6lakhs plus stampfee etc of Rs 36000 during June 2003. I sold it off for a consideration of 20 lakhs on 28.02.2013.

    Pl advise me what would be my tax liability? which date I should take into consideration? The date of allotment, or the date of Registration for calculation of purchase price? what is the exemption limit in case of CGS? is there any?
    Prasad

  191. Mudaliyar

    Dear Chauhan,
    I reced a order U/s 271A of the income tax act 1961 that to pay amount of Rs.25000.00. The penalty made by officer that my account shown under section 44AF, but it should be 44AA to maintain a/c.. My business activities that are selling flower bouquet through web site. Order is received from overseas clients and delivery made in India by us some times by our network florists. Some time the delivery goes to overseas via our network florists in abroad. In this case what is the section to be maintain to show our accounts? Kindly guide me. thanks.

  192. Vijay Zanvar

    Manish,

    Investing the capital gain earned on selling an immovable property to buy another immovable property saves tax on the gain. So there should be similar ways for saving tax on capital gain earned from FMP. Please elaborate, or considering writing another post.

    Best,
    Vijay Zanvar

  193. Shriyash

    Hi Manish,

    I bought a flat in 2004 for 13.43 lacs (stamp duty+flat price). I am now selling it for 73 lacs.

    My LTCG is almost 59.6 lacs. Following are my queries.

    1. Who decides on 10% or 20% (with or without indexation) tax on LTCG? Because with indexation my tax will be higher and I would want to go for without indexation tax?
    2. If I buy a commercial property will this LTCG can be used and tax be saved?
    Regards
    Shriyash

  194. Wriju Bharadwaj

    Hi Manish,

    One question regarding taxation with v/s without indexation which one applies to cap. gains from sale of residential flats?

    Plus are there any specific benefits for senior citizen women.

    On a separate note, I noticed the sheet on ZOHO has some missing/hard-coded values, I have updated a copy of the sheet but
    a. I don’t whether the calculations (post changes) are correct
    b. how can one update the copy on ZOHO so that everyone on this site can take benefit???

      • Wriju Bharadwaj

        Hi Manish,

        Sorry my question wasn’t clear.

        If a person is selling a residential property bought 10 years ago, when the income tax calculation needs to be done which one will apply?

        a. with indexation
        or
        b. without indexation

        Or is it that I have a choice between the two?

        Also is there is relief/benefit for senior citizen women?

          • Wriju Bharadwaj

            Hi Manish,

            Could you please indicate the Income Tax Act/Section which clarifies this rule of 10% and 20% (or states that the assessee can choose etc.)? I am asking for this because I got 3 different responses from 2 tax consultants and 1 chartered accountant (10, 20 and believe it or not the CA insisted 30%). That’s where I got confused; also I was browsing through jagoinvestor forum

            http://www.jagoinvestor.com/forum/capitals-gain-indexation-query

            It looks like someone replied to a similar query saying that
            ———————————————–
            “The option of paying tax at 10% without indexation is only available in the case of financial assets like mutual funds and the like; it is not available in the case of immovable property – for property, the tax has to be calculated at 20.6% post indexation”
            ———————————————–
            An old post from 2011, but got me concerned nonetheless.

            Thanks and Regards

  195. nithin

    property sold on may 25 2011. money put in capital gains account. now what is last date before i can buy a flat?? is it may 25 2013?? is there any grace period?? can the capital gains money be used for paying the sales tax also

  196. Sanjay

    Dear Manish,

    Is tax on capital gains independent on which tax slab the person is in or there is a connection ? I mean will the person have to pay tax on capital gain even if he/she is in min tax slab ?

    Regds
    Sanjay

  197. PRADEEP KUMAR

    A PROPERTY IN NAGPUR SOLD DURING THE YEAR 2012-13 AFTER DEATH OF MY FATHER WHICH WAS PURCHASED IN 1971 BY MY FATHER .I NEED INDEXED COST OF PROPERTY AS ON 01/04/1981 TO CALCULATE LONG TERM CAPITAL GAIN.HENCE I WANT TO KNOW WHAT DOCUMENT AND FROM WHERE I HAVE TO OBTAIN FOR THIS PURPOSE.

  198. ADARSH MOHAN

    Dear Manish, Thanks a lot for such informative website. My querry is that recently I had sold my property on 25th may 2013 @ Rs 40 lacs. Cost of purchase was Rs 34.54 lacs. Date of allotment was 31.08.2009 where as date of registration was 11.10.2012.

    My CA says that date of purchase shall be date of registration i.e. 11.10.2012. Accordingly, there shall be a SHORT term capital gain of Rs 5.46 lacs.

    However, as per your response in http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html to Mr Prasad at Sl No 494 & 495, date of purchase shall be Date of allotment i.e. 31.08.2009. According to this, indexed purchase value shall be Rs 48 lacs and LONG term capital loss of Rs 8.00 lacs.
    Kindly clarify. You are also requested to convey the treatment of this LONG term capital LOSS.

    Regards

  199. Saravanan A

    For the question you have asked at end, I tried to calculate. Looks like still we need to pay Tax for 1.66L which is the net profit. Am I right, you have asked how to avoid the whole tax?
    Calculation which I tried is given below:
    10*582/406
    14.33 => Indexed Price
    30-14.33
    15.67 => Profit in House

    10*582/551
    10.56 => Indexed Price
    3-15.67
    -12.67 => Profit in Stocks

    Net Profit
    14.33-12.67
    1.66

  200. Soaham

    Hi Manish,

    This is really amazing… I have subscribed to both the Wealth Club as well as the 100 Money Actions programs… While it was great to see that I already have fairly got everything on track as far as the 100 actions were concerned, I am now looking forward to the benefits from Wealth Club subscription…

    I had asked a question some time back when you sent emails asking about Tax-related queries… I did not get a response on that so I thought I’d post it here –

    Background –
    Like many others like her, I have got my wife to trade in the markets as well. The investments are not a lot and currently hover around 600,000. Since September 2012 when she started working, till Mar 31, 2013, her profit was about 60,000/-

    Now this is not taxable as per the tax slabs. However, this is still her Short Term Capital Gains. This is her only source of Income…

    Considering (and building upon) this scenario, I have the following questions –

    1. If her net profit from trading is < 200,001 – Will she pay any taxes? If so, would it be at 15%? Or she will not pay anything as her profits for the FY are below the taxable income slab?
    2. If her net profit from trading is between 200,001 and 500,000 – Will she pay 10% Income Tax considering the Tax Slabs, or pay flat 15% STCG Tax even if her income is in 10% range?
    3. If her net profit from trading is between 500,001 and 1,000,000 – Will she pay 0% for profits up to 200,000, 10% for profits up to 500,000, and 20% for profits that are more than 5L and less than 10L? Or will she pay a flat 15% on the entire profit amount?
    4. Finally, if her net profit is more than 1,000,001 – Will she pay 0% for profits up to 200,000, 10% for profits up to 500,000, 20% for profits up to 1,000,000, and 30% for the remaining profit amount? Or will she pay a flat 15% on the entire profit amount?

    Thanks in advance,

    Best,
    – Soaham

    • 1. No tax, if the income is below 2 lacs (whatever source it is, does not matter) , no tax. the 15% tax is there only when your income is above the taxable limit

      2. In that case flat 15%

      3. no , flat 15%

      4. same

  201. Babu

    Dear Manish,

    Thanks for your wonderful post. Please correct the Capital Gain and Tax with Indexation calculation in your CAPITAL GAIN calculator. In your calculator, capital gain was not used to calculate the tax indexation.

    -Babu

  202. Sunita

    Dear Manish,

    Thanks a lot for this informative article.

    I have a question in regard to calculation of LTCG while selling a constructed house. As I understand, on the cost side, I can include the cost of land, stamp duty while purchasing the land and the cost of construction later on. I can add these three components and then index the total to come up with the final cost.

    For cost of land and stamp duty, I guess I can use the original sale deed of the land in my favor.
    I am however not clear what is the basis for cost of construction. I had a detailed estimate prepared by a registered architect during construction. Can I use the cost mentioned in this estimate as the cost of construction and use the same for indexation.

    Thanks and Regards,
    Sunita

  203. Patel Bhupendra

    I have 4 acare agriculture land (vadilo parjit it means straight line varsdar ) in (VUDA) nearby corporation of vadodara , same agriculture land transfar into N.A. in March-2013, and can I sale my N.A. land ? How to calculate Capital Gain Tax, and if I sale Rs.500=00 per sq.ft.,what is alternative of Tax save? where I have to invest this tranction amount to save capital gain tax ?

  204. googly

    I have purchased a flat for 10L in oct 2002. Sold it at 70L in 2013. Apart from the indexation, Can I avail things like interest paid on loan on flat? or things like expenses done on flat like repairs?

    Thanks.

  205. sir, i have purchased a new flat for rs. 2000000 by making a loan in bank. after a month i have sold my old flat for rs. 1300000. my capital gains tax works out as
    rs. 131437. please tell me whether it is correct or not
    and one more that, i am going to incurr rs. 200000 for furniture and service tax and vat tax incurred for new flat comes out as around 200000. can i claim this amount and deduct it from my capital gain or not. or if i do some alterations in my new flat is it deductible from capital gains amt

    urgent please

  206. Ganesh

    Dear Sir,
    I had sold my home to Rs. 23 lakhs after (purchase on jan 2005 for Rs. 4,33,000) 8 year (on 4th may 2013) & purchase 2nd flat for Rs. 53,75,000 (10th may 2013) & settled my existing (occupied flat) home loan of Rs. 16,40,000 (13th june 2013)
    my queries are,
    1. what will be minimum capital gain ?
    2. Best option to save capital gain tax ?
    Please guide me! Waiting for your reply………

  207. Ankit

    The excel sheet for computing capital gains with and without indexation is wrong in many places, please correct it.

  208. Mahesh Thakur

    Hi Manish,

    We Sold our flat for 37Lacs in June 2013 (purchased for 20Lacs in March 2008)
    using the capital gain calculator, indexed purchase price is around 32Lacs.

    we booked a flat which is under construction in May 2013(one month before sale of our flat) and paid 6L as booking amount.

    do we still have to pay capital gain tax?
    please let me know.

  209. Balaiah, K

    My wife purchased a residential plot in 1986-87 for Rs.2200/- This was acquired by Govt. of AP for laying roads and compensation of Rs.330000/- is paid in 2012-13. Out of this Rs.33000/- was deducted towards IT and form 16A issued. My wife is House wife no other income is existing ever since her marriage in 1971. No income is also likely to accrue in future. Will you kindly compute her tax liability and intimate quickly and suggest measures. Thanks.

  210. shaheen

    Hi Manish, a few questions for you.Take this case. Suppose MY MOTHER AGED 68 YEARS, sold agricultural land for 2.5 crores. Will there be capital gains tax on sale of agricultural land? If yes, then if she buy three house in HER NAME for 50 laks, 30 lakhs and 20 lakhs respectively in HER NAME, will this amount (1 crore) be offset for the purpose of calculation of capital gains tax after taking into account ? In other words, would the capital gain tax be now payable on the remaining 1.5 crores only after taking into account indexation? If SHE buys one house in her name, 2nd house in my name and third house in my wife’s name then would she still be offset for the amount spent on purchase of the 2nd house and 3rd house as well or will the gift tax be liable to be payable by me and my wife? What is the gift tax rate? Last question, the area I live in has been declared as educational belt by the govt. Does this mean that the ‘land use’ has automatically become commercial from agricultural ?

    • No shaheen

      She cant do that, because agricultural land sale money can be offset only when another agri land is purchased. She cant take money from agri land sale and then buy commercial or residential lands or property . I would say if this amount of money is involved, better hire a Good quality CA !

      • shaheen

        Thanks Manish. But you did not answer the last query that the area I live in has been declared as educational belt by the govt. Does this mean that the ‘land use’ has automatically become commercial from agricultural ? If it has become commercial then would she have to buy commercial property to offset the capital gains tax or can she buy residential plot/property too to offset it?There is also a school and a college as my next door neighbors. Our land is nestled between the two.

        Another question. If she gifts the sales proceeds amount to me and my wife, then would she still have to pay capital gains tax? And would I and my wife be liable to pay income tax on this amount?

  211. Junaid

    Hi Friends,
    I am a salaried person, having form 16.
    I have income from Interest from my salary account.
    I have a little LTCG, and STCL of about 8K.
    My problem is, filling ITR-2 sheet, as the sheet CG-OS looks big puzzle to me.
    Please help me, what to fill in A 2a ~2d ( I have a loss of 8K)
    and i have a LTCG, i bout shares two years back and sold last year with a gain of around 5k. which section of B i should fill, and how to fill.
    (Please help me , as this is my first experience with the ITR-2)

  212. arya

    Hi Manish,

    I bought an underconstruction flat last year ( July 2012) which I took posession on April 2013. My total expenses till now for acquiring the flat is 56.25 lacs breakdown is 40 lacs ( basic price ) + 3.25 lacs ( parking and amenties ) + 5 lacs ( Registration and VAT ), 4 lacs ( wood work ) and till now I have paid bank interest of 4 lacs. I have registered the flat as per the guidance value which came to about 30 lacs.

    This month I am selling the apartment to a buyer for 66 lacs. He says he’ld deduct 1.03% as TDS straight away. That makes my profit 9 lacs.
    The buyer is going to register the property for the full agreement value of 66 lacs.
    If my short term capital gain is calculate as 66 lacs – 30 lacs = 36 lacs and if i pay according to tax slab of 30% i end up paying 10.8 lacs as tax !!!!! Plus I already paid 67900 TDS !!! So I am completely at loss.

    Are my above calculations correct ?

  213. arya

    Let me elaborate on my queries:-
    1. While calculating the STCG are costs like wood work, stamp duty, home loan interest considered part of cost ?
    2. The buyer is actually paying 5 lacs for wood work. Should this be part of the Sale deed and be calculated as my income ?
    3. If the buyer registers based on the guidenace value of 30 lacs ( if that is allowed for resale properties ), would that be considered my income and STCG be calculated as Nil ??

      • arya

        According to http://incometaxindia.gov.in/Archive/HowtoComputeyourCapitalGains_18062012.pdf

        Short Term Capital Gains is computed as below:
        STCG = Full value of consideration – (Cost of acquisition + cost of improvement + cost of transfer)

        Full Value of Consideration – This is the amount for which a capital asset is transferred.

        Cost of Acquisition – Cost of acquisition of an asset is the sum total of amount spent for acquiring the asset. Where the asset was purchased, the cost of acquisition is the price paid. Any expenditure incurred in connection with such purchase, exchange or other transaction eg. brokerage paid, registration charges and legal expenses etc.., also forms part of cost of acquisition.

        Cost of Improvement – The cost of improvement means all expenditure of a capital nature incurred in making additions or alterations to the capital asset. However, any expenditure which is deductible in computing the income under the heads Income from House Property, Profits and Gains from Business or Profession or Income from Other Sources (Interest on Securities) would not be taken as cost of improvement.

        So, in my case the STCG would be
        66lacs FVC – 48.25 lacs CoA (40 lacs basic price + 3.25 lacs parking and amenties + 5 lacs Registration and VAT ) – 4 lacs CoI( wood work ) = 13.25 lacs

  214. Rahul

    Hi Manish,

    Thanks for this informative post. I am filling in my returns now and am stuck with a problem with calculating capital gains. I had been granted stocks in my company in US. They were held in a Demat account in US. I sold the stocks a couple of years back. But I transferred the money to India this year. The dollar-rupee conversion rate on the day I sold the stocks (I have paid tax based on that) was less than the rate when I sold it. $1 == Rs 44 when I sold the stocks. $1 = Rs 54 when I transferred money to India. Does this difference constitute a capital gain ? If so, is it LTCG or STCG ?

    Thanks

  215. Would you have a capital gains tax calculator for SIPs? This is regarding some MF redemption that I had done in AY 2011-12 for which I have got a query from the IT Department now. I hadn’t paid any tax on the Short term and Long term (Investment had both Equity and Debt MFs) at that time due to lack of knowledge about it. I’d like to pay the appropriate tax now but do not know how to compute the capital gains. I have tried checking in CAMS/Karvy but none of them have the capital gains statement for transactions done 3 yrs back…

  216. Muthu Krishnan V