SIR, I PURCHASED ONE PROPERTY ON 5.2.2013 FOR RS. 4,50,000/- AND SOLD THE SAME PROPERTY ON 6.10.2023 FOR RS. 19,45,000/- WHAT WILL BE THE CAPITAL GAIN.
Ans: Calculation of Capital Gain
1. Determine the Purchase Price:
You purchased the property for Rs. 4,50,000.
2. Determine the Selling Price:
You sold the property for Rs. 19,45,000.
3. Calculate the Capital Gain:
Capital gain is the difference between the selling price and the purchase price.
4. Adjust for Inflation:
Since the property was held for more than two years, it qualifies as a long-term capital asset. To calculate the long-term capital gains (LTCG) accurately, adjust the purchase price for inflation using the Cost Inflation Index (CII). This adjustment helps account for the inflation impact over the holding period.
5. Long-Term Capital Gains Tax:
For properties held long-term, the LTCG tax rate is 20% with indexation benefits. This means you pay tax on the gains after adjusting for inflation.
Detailed Calculation:
Purchase Price: Rs. 4,50,000
Selling Price: Rs. 19,45,000
Capital Gain: Selling Price - Purchase Price = Rs. 19,45,000 - Rs. 4,50,000 = Rs. 14,95,000
After adjusting the purchase price for inflation using the CII, calculate the actual taxable gain. The tax is computed at 20% on the adjusted gain.
Final Insights
You have made a significant gain on your property. The total capital gain before indexation is Rs. 14,95,000. After adjusting for inflation, the taxable gain might be lower. The tax liability will be 20% on the adjusted gain. It’s advisable to consult a Certified Financial Planner or a tax expert to ensure accurate calculations and to explore possible exemptions or deductions that might be available to you.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
