How to pass entry in tally for indexation loss in property sold

Ans: Passing entries of notional loss as per income tax law is not correct, thus, correct entry can not be passed

Ans: Yes, you can use ITR 1 to file your income tax return if you only have the following:

Income from salary
Income from one house property (even if there is a capital loss after indexation)
Other income sources specified under ITR 1 (interest income, dividend income etc. within the specified limits)
Since you mentioned minor losses after indexation from property sale, it likely falls under the capital gains from house property which is acceptable for ITR 1 filing.

However, there are some situations where ITR 1 might not be suitable even with property sale with capital loss:

If you have income from more than one house property
If you have any other capital gains (from stocks, mutual funds etc.)
If your income exceeds the specified limits for ITR 1
In these cases, you might need to consider filing ITR 2.

It's always advisable to consult a tax advisor for personalized guidance based on your complete income picture. They can help you determine the most appropriate ITR form to use and ensure you claim all the deductions and benefits you're entitled to.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You bought a flat in Chennai for Rs. 29 lakhs in 2009. You sold it for the same price in 2024. This scenario involves calculating the long-term capital loss.

Calculating Long Term Capital Loss
Original Purchase Cost:

You bought the flat for Rs. 29 lakhs in 2009.

Additional Costs:

You paid Rs. 15 lakhs in interest and Rs. 3 lakhs for interiors. However, without bills, it’s tough to claim the interior costs. Interest paid on a home loan is also not considered part of the cost for capital gains purposes.

Sale Price:

You sold the property for Rs. 29 lakhs in 2024.

Indexed Cost of Acquisition:

Indexation helps to adjust the purchase cost to account for inflation. This reduces your capital gains.

Indexed Cost Calculation:
The Cost Inflation Index (CII) for 2009-10 is 148, and for 2023-24, it is 348.

Indexed Cost of Acquisition = Purchase Price * (CII of Sale Year / CII of Purchase Year)

Indexed Cost of Acquisition = 29,00,000 * (348 / 148) = Rs. 68,14,865.54

Long Term Capital Loss
Selling Price: Rs. 29,00,000

Indexed Purchase Price: Rs. 68,14,865.54

Long Term Capital Loss = Selling Price - Indexed Purchase Price
= Rs. 29,00,000 - Rs. 68,14,865.54
= Rs. -39,14,865.54

You have a long-term capital loss of Rs. 39,14,865.54.

Using Indexation Option
You can use indexation to adjust the purchase cost for inflation. This helps to accurately reflect the real value.

Booking Long Term Capital Loss
To book the long-term capital loss, follow these steps:

Document the Sale:

Keep the sale deed and bank statements showing the sale proceeds.

Calculate Indexed Cost:

Use the Cost Inflation Index for the purchase and sale year.

File Income Tax Return:

Declare the long-term capital loss in your ITR. You can carry forward this loss for up to 8 years to set off against future capital gains.

Documents Required
Purchase Deed:

Document from 2009 showing the original purchase price.

Sale Deed:

Document from 2024 showing the sale price.

Bank Statements:

Proof of receipt of sale proceeds.

Cost Inflation Index:

Values for 2009-10 and 2023-24.

Interest Proof:

Though interest isn't included in cost calculation, keep proofs for future reference.

Final Insights
You can claim a long-term capital loss of Rs. 39,14,865.54.
Use indexation to calculate this loss accurately.
Maintain proper documents to support your claim.
File the loss in your income tax return to offset future gains.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in