This is calculated using Cost Inflation Index (CII). In cases where the property is bought before 2001, the IT laws allow you to adopt the fair market value as of 1^st April 2001.  It may be noted that this fair market value cannot be higher than the circle rate/guidance value as of this date.

The CII of 2001-02 is taken as base value of 100 and this value for current FY is 331.

The Indexed Cost of Acquisition will thus be = 331/100*(FMV as of 1^st April, 2001). 

If you have spent for any maintenance etc., you can add to this and claim.

The capital gain tax will be 20% of the Sale value minus Indexed Cost of Acquisition.

Surcharge and Cess will be as applicable on the above tax computation.

3. How to invest this money and in what type of instruments so that tax can be saved?

Ans: Indexation benefit will be available from the date of payments made to the builder.

If you want to avail tax exemption by investing in bonds, you have to invest amount of taxable capital gain (derived after taking benefit of indexation), in bonds within 6 months of transfer of property.

Accordingly, sale proceeds can be realised in regular saving account and can be kept till the time you invest in specified bonds.

Ans: Your thought process is right as far as indexation is concerned. It will be 3.63X to be precise.

The deductible expenses are any sale related expenses like brokerage etc from capital gains tax computation.

Exact calculations will need to be done in consultation with your CA.

Ans: Capital Gains Tax Calculation for Land Sale in Chennai (Disclaimer: This is an estimate, consult a tax advisor for specific calculations)
Here's an approximate calculation of your capital gains tax for selling 750 cents of land in Chennai:

1. Capital Gains Calculation:

Total Sale Value: 750 cents * ?33,000/cent = ?24,75,000
Fair Value (Assuming Used for Cost Calculation): 750 cents * ?54,500/cent = ?40,87,500
Capital Gains: ?40,87,500 (Fair Value) - ?24,75,000 (Sale Value) = ?16,12,500
2. Taxable Capital Gains:

You can potentially claim exemptions under various sections of the Income Tax Act, 1961. Here are two possibilities:

Section 54: This allows exemption of capital gains tax if you invest the gains in a new residential property within one year before or three years after the sale. However, this exemption might not apply since the land you're selling is not considered a residential property.
Section 54EC: This allows exemption if you invest the capital gains in specific government bonds within 6 months of the sale.
In this scenario, without considering any exemptions, your taxable capital gains would be ?16,12,500.

3. Capital Gains Tax Rate:

The capital gains tax rate for land depends on the holding period:
Short-term capital gains (held for less than 2 years): Taxed at your income tax slab rate (can be up to 30%).
Long-term capital gains (held for more than 2 years): Taxed at 20% with indexation benefit (adjusts for inflation).
Without knowing the holding period, we can't determine the exact tax rate.

4. Capital Gains Tax with Bonds (Section 54EC):

If you choose to invest in specific government bonds under Section 54EC within 6 months of the sale, the entire capital gains amount (?16,12,500) can be exempt from taxation.
5. Purchaser's Perspective:

The purchaser generally doesn't pay capital gains tax on the purchase.
However, they might need to pay stamp duty and registration charges on the purchase price of the land as per the prevailing rates in Chennai.
Important Note:

This is a simplified explanation, and tax laws can be complex. For an accurate calculation of your capital gains tax liability, consult a qualified tax advisor in Chennai. They can consider factors like your specific situation, holding period, and any applicable exemptions to provide the most accurate estimate.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

The latest budget gives you two options:

1. 12.5% LTCG on 1.6 Cr minus cost of acquisition 35 years before.

2. 20% LTCG on the difference between 1.6 Cr and indexed cost of acquisition.

For this calculation it is advisable to approach a CA or a professional tax advisor who can also advise you ways to save LTCG tax payment through exempt investments permitted under income tax act.

Best wishes;