I had bought a house in 1999 @3.5 lakhs single story and then build second story at a cost of rs 8 lakhs in 2009,i do not have bills of construction.can i take the cost in indexing for calculating my capital gains.Also which r bonds which I can buy for capital gains.
Ans: To calculate your capital gains for the sale of your house, you would need to consider the cost inflation index (CII) provided by the Income Tax Department of India. The CII is used to adjust the purchase price and cost of improvements for inflation, thereby reducing the taxable capital gains.
However, since you mentioned that you do not have the bills for the construction of the second story, it might be challenging to provide concrete evidence for the cost of improvements. In such cases, it is generally advisable to have supporting documents like bills, receipts, or other evidence to substantiate the cost of improvements.
If you are unable to provide the necessary documentation, you may have to consider the indexed cost of acquisition based on the purchase price of the property alone, without factoring in the cost of improvements. You can use the CII to adjust the purchase price for inflation from the year of purchase to the year of sale.
Regarding the bonds for capital gains exemption, the Income Tax Act provides for specific bonds, called "Capital Gains Bonds" or "Section 54EC Bonds," which offer tax exemption on long-term capital gains. These bonds are issued by entities such as the Rural Electrification Corporation (REC) and the National Highways Authority of India (NHAI). By investing the capital gains amount within six months from the sale of the property into these bonds, you can claim a tax exemption on the capital gains.