A2, Cost Inflation Index for the Year of Acquisition. A3, Purchase Price of the Immovable Property. A4, Add: Expenses relating to acquisition (e.g. brokerage, The formula for long term capital assets is similar; however, the one difference is that the “Indexed Cost of Improvement/Indexed Cost of Acquisition” from the How much capital gain tax do I need to pay for ancestral agricultural property? Long-term capital gains = Sale amount - Indexed cost of acquisition. Long-term Formula for computing indexed cost =(Index for the year of sale/ Index in the year of acquisition) x cost. For example, if a property purchased in FY 2003-04 for income under capital gains, transfer of capital assets, cost of acquistion, cost of improvement, etc. 3.3 Property held as stock-in-trade is not capital asset 8.5 Cases in which benefit of indexation of cost of acquisition/cost of improvement is 9 Nov 2017 Cost Inflation Index table or Indexation table. The Indexation table used to have a base year of FY 1981-82, which means that any property
17 Nov 2017 Sale price of Rs 43 lakh minus indexed cost of Rs 33 lakh is Rs 10 lakh. the assessee has identified a particular property which he intended
17 Nov 2017 Sale price of Rs 43 lakh minus indexed cost of Rs 33 lakh is Rs 10 lakh. the assessee has identified a particular property which he intended 15 Feb 2018 How much Capital Gains Tax you need to pay on sale of Property LTCG = Full value of consideration — (indexed cost of acquisition + 3 Feb 2017 Suppose the property was purchased for 5 lakhs in 1988-89, the indexed purchase is 5 x 7.2 ~ 36 Lakhs. This is the indexed cost of acquisition. 6 May 2009 Capital Assets are the properties which can be held by a person . Capital Gain = Sell Price – Indexed Purchase Price profit amount i.e. (Capital Gain = Sale Price MINUS Indexed Cost of Acquisition, Say Rs. 10 Lakhs).
Since As per Explanation (iii) to Section 48 Of Income Tax Act “”indexed cost of acquisition” means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later”
How to calculate Fair Market Value of Property - Capital gains on property purchased before 1981 When it comes to calculating long term capital gains on property the cost inflation index for the financial year of purchase and sale helps and to a large extent reduces the seller’s tax liability in most cases. Cost Inflation Index is a measure of inflation under Section 48 of the Income-Tax Act.
The formula for long term capital assets is similar; however, the one difference is that the “Indexed Cost of Improvement/Indexed Cost of Acquisition” from the
Since “cost of acquisition” is historical, the concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost. Consequently, a lower amount of capital gains gets to be taxed than if historical cost had been considered in the computations. NOTIFIED COST INFLATION INDEX UNDER SECTION 48, EXPLANATION (V) As per Notification No. So 3266(E) [No. 63/2019 (F.No. 370142/11/2019-TPL)], Dated 12-9-2019, following table should be used for the Cost Inflation Index :- Cost Inflation index also called Capital gain index is used to calculate the indexed cost of acquisition for long-term capital gain tax. Read this article to know more about the cost inflation index who notifies it with practical examples For the purpose of computing long term capital gains, the property seller has to calculate the indexed cost of purchasing the property. To assess the indexed cost, the seller needs to multiply the property's cost of acquisition with the cost inflation index, as notified by the tax authorities for the year of transfer. This figure then has to be Now the indexed cost of acquisition will be as per above formula i.e. Purchase Cost of the Asset X CII for the year in which the asset is sold. CII for the year in which the asset was first. held by the assessee OR F.Y 2001-02 Indexed Cost of Acquisition=Rs 45,00,000 X 252 = Rs.94,88,372. 129
So, indexed cost of acquisition would be 55,10,563 [25,00,000 * (939/426)]. In the same way, adjust additional construction cost against inflation. CII for the year in which the new floor was added is 497. So, the indexed cost for this will be 18,89,336 [10,00,000 * (939/497)].
22 Oct 2009 Therefore, even in case of gifted property where the cost of acquisition is taken of the previous owner, the Cost Inflation Index is taken for the
22 Oct 2009 Therefore, even in case of gifted property where the cost of acquisition is taken of the previous owner, the Cost Inflation Index is taken for the So, indexed cost of acquisition would be 55,10,563 [25,00,000 * (939/426)]. In the same way, adjust additional construction cost against inflation. CII for the year in which the new floor was added is 497. So, the indexed cost for this will be 18,89,336 [10,00,000 * (939/497)]. Indexed cost of acquisition – This is the term used for the purchase cost arrived at after adjusting the cost inflation index numbers. Capital gains – The profit arrived at after selling the capital asset is called as Capital gains. Indexed Cost of Acquisition = Actual Purchase Price * (Index in year of Sale / Index in Year of Purchase) If the property is purchased before 2001, then you need to get the Fair market value of the property in 2001 and the use that for Indexed cost. Indexed cost of acquisition is the cost of acquisition, multiplied by the cost of inflation index for the year of sale and divided by the cost of inflation index for year of purchase / acquisition. The index for 2017 is 272, while the index for FY 2003-04 is 109. When the indexation benefit is applied to “Cost of Acquisition” (purchase price) of the capital asset, it becomes “Indexed Cost of Acquisition”. Points to Ponder In case of property received in the will, CII has to be taken for the year in which the property is received. Indexed Cost of Improvement. Cost of improvement would be indexed in the same manner as the cost of acquisition. Any expense incurred before 1-4-81 is to be completely ignored and only the expense incurred on improvement after 1-4-81 is to be taken into account for the purpose of indexation.