Q.824 Capital Gains Calculation

on Land Sold in India

Question: Hello I need some information. Im a NRI currently residing in Dubai. In 2013 my dad gifted me a property in india which was under his name since 1982. Now i have sold the property for 55lakhs , my CA says that i would have to pay 10lakhs tax on this . I would like to know what would be your advise on this . My dad brought this property in 1982 for rs44000 . Its a open land that was sold without any construction. I look forward for your reply. Thanks Ghazal [November 18, 2015] Answer: Generally when land that is considered to be agricultural land (farmland) is sold there are no capital gains. For other type of land, long term capital gains would apply after taking cost index inflation into account. Assuming that your father bought the land for forty four thousand rupees. Your accountant is right with the 10 lakh figure, you can easily calculate the capital gain yourself in a few minutes! You have not mentioned month of acquisition by your father, so let’s use the 1982 financial year. The cost inflation index for the year 1981 -1982 is 100 and for the year of sale 2015- 2016, the cost inflation index is 1081. Use these numbers to calculate your capital gains tax. A easy to follow, step by step calculation to calculate long term capital gains in India is provided under question number 211 of this website. Click HERE to visit page. Do the calculation and you will find that @ 20% capital gains tax, the 10 lakh amount is pretty close.