Calculate Income Tax on a sale of property

Hello Everyone,

Can anyone help me with calculating my tax liability on a property transaction?

Property Bought for – Rs.1, 05, 000/-
Property Bought On – March 26, 2008

Property Sold for – Rs.3, 10, 000/-
Property Sold On – Feb 28, 2012

Thanks in advance.
Kapil.



By Kapil on April 17, 2012 · Posted in

10 Comments | Post Comment

justgrowmymoney says:

See Cost Inflation Index chart here – http://www.caclubindia.com/forum/cost-inflation-index-table-chart-175456.asp

2007-08 index was 551
2011-12 index was 785

So the notional cost price paid = 105000*(785/551) = 149591

The sale price is 310,000

Since property is held for more than 4 years the Long term profit = 310000 minus 149591 = 160408
Tax to be paid = 20% of 160408 = 32081

If you need to save tax check out the avenues mentioned in this article http://www.dnaindia.com/analysis/column_capital-gains-tax-on-property-decoded_1587254

- Invest in Capital gains tax saving bonds/reinvest in another property

Posted on April 17th, 2012

ashal jauhari says:

Dear Kapil, the gains are eligible for LTCG as the holding period is more than 3Y. Here is the calculation.

A. Purchase Year = 2007-2008
B. Cost Inflation Index of A above = 551
C. Purchase cost = 105000
D. Sell Year = 2011-2012
E. CII of sell year = 785
F. Indexed purchase price = 105000*785/551 = 149591 round about 149600 Rs.
G. Sell Price = 310000
H. LTCG = G – F = 160400
I. Tax @ 20.6% on the LTCG = 33042 Rs.

Thanks

Ashal

Posted on April 17th, 2012

Kapil Malhotra says:

Thanks justgrowmymoney!!
A very well response indeed!! I liked the article as well.

Everything that I needed.

Posted on April 17th, 2012

Kapil Malhotra says:

Thanks Ashal for a descriptive response.

Posted on April 17th, 2012

ashal jauhari says:

Dear Kapil, you are always welcome. Please keep asking.

Thanks

Ashal

Posted on April 17th, 2012

TCB says:

Dear Ashal,

I stay in a house owned by my father (first name) and me (second name). My father is expired. Can I buy another residential property to save capital gains tax which I have to pay for selling a flat ?

Thanks

Posted on September 10th, 2012

Ashal Jauhari says:

Dear TCB, yes is the answer. By the way, you are selling this same house in which you are living or it’s another house? Asking just to get clarification from your side.

FYI – in case of property, there is no 1st holder & 2nd holder. There are merely holders. Yes shares of these holders may be defined.

Thanks

Ashal

Posted on September 10th, 2012

TCB says:

Dear Ashal,
Thanks for your reply. I am not selling the house in which I stay. I am selling another house and want to buy residential property to save long term capital gain tax. As I already own the house in which I stay, can I buy another property to save tax ?

Posted on September 12th, 2012

Ashal Jauhari says:

Dear TCB, yes you can purchase another house to save on LTCG.

Thanks

Ashal

Posted on September 12th, 2012

Manish says:

Dear Ashal,

I have similar query. I am a salaried employee and my annual income is 6 lacs. So in the above scenario If I sell my house after 3 years and make profit of 1 lac then my taxable income will be 6 lacs + 1 lac = 7 lacs or do I need to pay tax separately on 1 lac applying above formula ?

Regards

Posted on January 8th, 2013