Profit calculation from Sale of Flat of three storeyed building under construction.

POSTED BY Rajesh Chanana ON February 12, 2013 6:10 pm COMMENTS (11)


   I purchased a plot in New Shimla in Dec,2006 for Rs.900,000/-(nine lacs)125.80 sq.mts.I started construction on the same in Aug,2010 and spent Rs.11,50,000/- on constructing three floors of 80 sq.mts each.till feb.2013.Now I have sold one floor of the building(partial complete)for Rs.24,00,000/-(twenty four lacs)dated 28/02/2013.The building is incomplete till date.I want to know the profit after sale of the floor and tax calculation thereof.

Thanks,Dr Rajesh Chanana.Mob.No.09816070723.

11 replies on this article “Profit calculation from Sale of Flat of three storeyed building under construction.”

  1. Dear Rajesh, yes is the answer. As it’s your money from day one, all the income ‘ll be under your name.



  2. Rajesh Chanana says:

    Sir,I will sell the further floors in near future,then again payment will be received by both of us equally.Then again I will be liable or both of us.Thanks.

  3. Dear Rajesh, as your wife was merely a co-owner on paper & not actual owner in terms of money spend for her share in the property, you can not save tax the way you are thinking. All the LTCGs & STCGs ‘ll be taxable in your name only.

    We do not promote tax evasion or unhealthy practices. Still if you want to move ahead the way you are thinking, please contact any local tax professional or CA who may do the job for you but be ready to fight it out if your case comes under scruitiny.



  4. Rajesh Chanana says:

    Sir,I am sorry I have to disclose one more thing,plot was purchased by me and construction was also done by me,but I got my wifes name added in 2008 as a co owner of the plot.Now when we sold one floor both of us got separate payments of Rs 12 lacs each.My wife did not invest anything in plot purchase/in construction.
    If my wife shows capital gain of 12 lacs can she invest the same in further construction of the same building in next one or two years to save LTCG.
    I show payment received 12 lacs and pay LTCG/tax on your calculation divided by two.This will help me to save capital gains tax and Income tax as well.
    Please guide.Thanks.

  5. Dear Rajesh, only Land prices ‘ll qualify for LTCG, the floor consturction is not completed yet, hence the gains on it ‘ll be STCG.

    So for land purchase price of 3L Rs., the indexed price of purchase = 492500

    Hence indexed LTCG = 533000 – 492500 = 40500 Rs.

    the STCG on construction = sell price – construction price = (2400000 – 533000) – (1150000/3) = 1483667

    So Tax on LTCG ‘ll be @ 20.6% & Tax on STCG ‘ll be at your slab rate.

    I do not know your slab rate, so can not comment.



  6. Rajesh Chanana says:

    Sir,24 lacs is the sale price of one floor,and now the cost of plot is 16 lacs/3=5.33 lacs and cost on construction is 24 lacs/3=8 lacs.I want the profit calculation after indexed pricing and further evaluations.Thanks.Dr.Chanana.

  7. Dear Rajesh, you mean to say out os sell consideration of 24L Rs. against a floor sold by you, 16L Rs. is meant for land & 8L Rs. meant for construction?

    Please confirm.



  8. Rajesh Chanana says:

    Sir,As on date the land value is around 16 lacs and total construction cost of construction will be apprx. 8 lacs into three floors ie 24 lacs.Thanks.

  9. Dear Rajesh, so effectively you have sold 1/3 part of your land also. The part of land ‘ll become LTCGs based upon the break up of land & floor construction price provided by you.

    Now do tell me, what’s the price of land & what’s the price of construction?



  10. Rajesh Chanana says:

    This is three storeyed building,land rights will be equally distributed among three owners.Thanks.

  11. Dear Rajesh, what about the land rights against this floor sell?



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