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Land Acquired for Road Development: Tax Implications for 6000 sq ft Plot?

T S Khurana

T S Khurana   |398 Answers  |Ask -

Tax Expert - Answered on Jan 28, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Chappad Question by Chappad on Jan 27, 2025Hindi
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Hello Sir, I had a quarter acre of land which I bought for Rs 56 a sq foot. in 2005. A portion of this land, about 6000 sq ft has been acquired by the NHAI in 2023 for road development for which I got a compensation of Rs 300 psf. What is the tax implication on this?

Ans: 01. As per details provided, you have a LTCG (Long Tern Capital Gain) of Rs.14,64,000.00 (6000*(300-56)), without Indexation..
02. It shall be covered in F/Y 2022-23 or 2023-24 depending upon the date you received compensation. You tax calculations shall be different & depend upon the f/y in which the transaction falls. Benefit of indexation will also depend up to the date of transaction.
03. Date of purchase is also required for exact calculation of LTCG.
04. Assuming, your purchase is during f/y 2005-06 (117) & Sale is during 2023-24 (348), your LTCG tentatively shall be about Rs.8.00 lakhs, after Indexation.
05. This LTCG is likely to be taxed @20% (Rs.1.60 lakhs).
06. Many other factors will effect your tax calculations, like Other Incomes, Tax Savings etc., during this f/y under reference.
07. You may adopt tax planning to save LTCGs, by investing in House Property or Capital Gain Bonds etc.
Most welcome for any further clarifications. Thanks.
Asked on - Jan 29, 2025 | Not Answered yet
Thank You sir.
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