Selling a 1987 Property: Can I Benefit from Indexation on Improvement Costs?

Ans: To calculate the indexed cost and capital gains tax on the sale of your flat, we will use the Cost Inflation Index (CII) provided by the Income Tax Department of India.

Here's the step-by-step process:

Step 1: Determine the Purchase Cost and Sale Price
Purchase Cost: Rs. 3,50,000 (February 2002)
Sale Price: Rs. 70,00,000 (August 2023)
Step 2: Identify the Relevant Cost Inflation Index (CII)
CII for FY 2001-02 (the base year for purchase): 100 (as per the updated base year of 2001-02)
CII for FY 2023-24 (the year of sale): 348
Step 3: Calculate the Indexed Cost of Acquisition

Indexed Cost of Acquisition: Rs. 12,18,000

Long-Term Capital Gain: Rs. 57,82,000
Tax on LTCG: Rs. 11,56,400
Therefore, you will need to pay Rs. 11,56,400 as long-term capital gains tax on the sale of your flat.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: As per Budget Proposals-2024, for the F/Y 2024.25, you may opt any of the following Options :
(a). Tax Rate 20% with Indexation or,
(b). Tax rate 12.50% without Indexation.
You may calculate the tax accordingly & go for the minimum tax option.
Most welcome for any further clarifications. Thanks.

Ans: Hello;

Yes you may pay LTCG @ 20% with indexation benefit.

Or

12.5% without indexation benefit.

Best wishes!!