Any gain, arising from its sales is considered as long term capital gain. In case of long term capital gains the capital gains is calculated according to indexed cost of acquisition and improvement. Cost inflation index of the year of acquisition and improvement is considered for the purpose of capital gain calculation. In case the Asset sold / transferred is a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on Long Term Capital Gain is available on the amount of investment in the new asset to the extent of the capital gains. 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 Long term Capital gains after Indexation = Sales consideration - Indexed cost of acquisition Taxes = 20% * Long term capital gains after indexation The current base year for CII is FY 2001-02 and the CII value starts at 100 for that year. The formula used for this is as follows: Indexed cost of acquisition = Actual purchase price * (index in the year of sale/index in the year of purchase) Long term Capital gains after Indexation = Sales consideration - Indexed cost of acquisition Taxes = 20% * Long term capital gains after indexation
In case the Asset sold / transferred is a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on Long Term Capital Gain is available on the amount of investment in the new asset to the extent of the capital gains.
Once the Cost Inflation Index is applied to the cost of acquisition, it becomes an indexed cost of acquisition. If you are selling a capital asset after 2 years of its purchase, the gains will be considered as Long-Term Capital Gains. 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 divided by the cost inflation index of the year of purchase. Now the indexed cost of acquisition will be as per the above formula i.e. Indexed Cost of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Long Term Capital Gain=Selling Price-Indexed Cost of buying property=Rs.33,76,069. (Note-As per the below Cost of Inflation Index (CII), the CII rate for FY 2017-18 is 272 and for FY 2005-06, it is 117). 1) Please clarify, to save tax on long term capital gain, investing in purchase of another house property the amount, equal to total amount of sale proceeds less (a) cost of acquisition and (b) cost of improvement of the capital asset transferred, is sufficient. The Income Tax department recognizes this and issues an annual Cost Inflation Index (CII) that allows you to index your cost of acquisition to take inflation into account. This indexed cost is then used to calculate your long term capital gains and the resultant tax on same.
Cost inflation index (CII) is an important element in the calculation of inflation-indexed long-term capital gains. It helps in evaluating the estimated increase in price of property due to inflation. Long-term capital assets, like residential property, are recorded at cost price.
Any gain, arising from its sales is considered as long term capital gain. In case of long term capital gains the capital gains is calculated according to indexed cost of acquisition and improvement. Cost inflation index of the year of acquisition and improvement is considered for the purpose of capital gain calculation. In case the Asset sold / transferred is a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on Long Term Capital Gain is available on the amount of investment in the new asset to the extent of the capital gains. 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 Long term Capital gains after Indexation = Sales consideration - Indexed cost of acquisition Taxes = 20% * Long term capital gains after indexation The current base year for CII is FY 2001-02 and the CII value starts at 100 for that year. The formula used for this is as follows: Indexed cost of acquisition = Actual purchase price * (index in the year of sale/index in the year of purchase) Long term Capital gains after Indexation = Sales consideration - Indexed cost of acquisition Taxes = 20% * Long term capital gains after indexation Cost Inflation Index for AY 2019-20, FY 2018-19 for Long Term. Capital gain is the profit you make on selling an asset. It can be stock, real estate, mutual funds, jewellery etc. If you are selling an asset after one year from the date of its purchase, the profit becomes a short term Cost inflation index (CII) is an important element in the calculation of inflation-indexed long-term capital gains. It helps in evaluating the estimated increase in price of property due to inflation. Long-term capital assets, like residential property, are recorded at cost price.
Computation of Long Term Capital gain: While computing Long term Capital Gain , indexation is done for the cost of acquisition and improvement. Cost Inflation
14 Dec 2016 Calculate the indexed cost of acquisition. To arrive at this figure, multiply the purchase price and improvement cost by the Cost Inflation Index (CII) Long Term Capital Gains Tax of 10% (without indexation benefit) introduced on capital gains and is eligible for the benefit of indexation of the acquisition cost 9 Nov 2017 While calculating long-term Capital gains tax government has allowed adjusting the cost price of the capital asset with the inflation numbers 3 Apr 2019 use FMV/ Indexed Cost of Acquisition for arriving at the figure of long term capital gains. It's likely that investors in property will stand to gain in 25 Jan 2011 Indexed Cost of Acquisition = (Actual cost of purchase) * (CII Of Year of Sale)/(CII of Year of Purchase). Capital Gain = (Sale Price MINUS Indexed 7 May 2018 Until financial year 2017-18, Long Term Capital Gain (LTCG) tax on equity or tax of 10% (without indexation) on gains made above ₹1,00,000 per The cost of acquisition of share or unit bought before 1st February 2018
Many of us face the problem of calculation of capital gain on sale of property which was towards long term capital gain arising on the sale of the residential flat no. As regards the third issue regarding indexed cost of acquisition, Ld. CIT (A)
30 Jul 2009 Rajesh, had one more question for you relevant to Capital Gains. that I sell, what conversion rate should I use to determine the "Cost of Acquisition"? 2010 being less than one year will tantamount to short term capital gains. The ITO is insisting that indexation benefit is not applicable for assets bought 6 Jun 2017 A Summary of the Long Term Capital Gains Tax and Its Implications. In other words, if you hold a capital asset (like stocks, bonds, and real estate) Once the Cost Inflation Index is applied to the cost of acquisition, it becomes an indexed cost of acquisition. If you are selling a capital asset after 2 years of its purchase, the gains will be considered as Long-Term Capital Gains. 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 divided by the cost inflation index of the year of purchase. Now the indexed cost of acquisition will be as per the above formula i.e. Indexed Cost of Acquisition=(Rs.50 lakh/117)*272=Rs.1,16,23,931. So the Long Term Capital Gain=Selling Price-Indexed Cost of buying property=Rs.33,76,069. (Note-As per the below Cost of Inflation Index (CII), the CII rate for FY 2017-18 is 272 and for FY 2005-06, it is 117).