How to compute capital gain on sale/transfer of Land and Buildings?
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Computation of Capital Gain ➤ A. For Long-Term Capital Gain (LTCG) As per Section 48 (mode of computation): LTCG = Full Value of Consideration (FVC) – (Indexed Cost of Acquisition + Indexed Cost of Improvement + Expenses on Transfer) Indexed Cost of Acquisition (ICOA) == Original cost × (CII of yearRead more
Computation of Capital Gain
➤ A. For Long-Term Capital Gain (LTCG)
As per Section 48 (mode of computation):
Indexed Cost of Acquisition (ICOA) =
= Original cost × (CII of year of sale ÷ CII of year of purchase)
CII (Cost Inflation Index) is notified annually under Rule 48.
📌 Note: If property is inherited, cost to the previous owner is considered.
Tax Rate:
20% with indexation under Section 112
Surcharge + cess applicable
➤ B. For Short-Term Capital Gain (STCG)
Tax Rate:
As per normal slab rates applicable to the assessee.
📦 3. Deductions from Capital Gains (Expenses on Transfer)
Brokerage/commission
Stamp duty/registration
Legal fees
Advertising cost for sale
💡 4. Exemptions (Optional)
You may claim capital gain exemption under following sections if reinvested:
Yes, under the Indian Income Tax Act, certain insurance claim receipts are treated as capital gains and are taxable accordingly. Here's a detailed breakdown: Taxability of Insurance Claims under Section 45(1A) Section 45(1A) of the Income Tax Act, 1961, addresses the tax implications of insurance cRead more
Yes, under the Indian Income Tax Act, certain insurance claim receipts are treated as capital gains and are taxable accordingly. Here’s a detailed breakdown:
Taxability of Insurance Claims under Section 45(1A)
Section 45(1A) of the Income Tax Act, 1961, addresses the tax implications of insurance compensation received due to the damage or destruction of a capital asset. This section was introduced to tax such receipts as capital gains, even though there’s no actual transfer of the asset.
✅ Applicability Conditions:
The insurance compensation is received due to the damage or destruction of a capital asset (e.g., building, machinery, land).
The cause of damage or destruction is one of the following:
Natural calamities (e.g., flood, cyclone, earthquake)
Riot or civil disturbance
Accidental fire or explosion
Action by an enemy or measures taken to combat such action
If both conditions are met, the insurance compensation is deemed as consideration received for the transfer of the asset, and capital gains tax is applicable.
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