Capital Gain, land sold, purchased in installments

Income Tax Income from Capital Gains
#1

I had been alloted a residential plot by GDA in year 2003. I started paying quarterly basis installments from year 2004 till 2008 - 13 installments I paid with interest.
Registration of property was done in July 2014.

I sold in Mar 2023.

Do we need to consider index value of each quarterly installments paid between 2004 to 2008? Any example you may like to mention for my better understanding would be grateful to you.

Could you please throw some light on this.

Request your support here.

Regards,

#2

Hi @Sanjay_S

As the registration of the property is done in July 2014, you need to consider the cost inflation index (CII) value of 2014.
Hence, you cannot consider the index value of quarterly installments paid between 2004 to 2008.

Hope it helps.

#3

@Muskan_Balar - thank you so much for your reply. I am sharing more details for your further feedback which is as follows:

Please find below the table where in the end there is sum of EMI which is Rs. 493920 and sum of indexation price which is Rs. 1199834. What should be cost of acquisition Rs. 493920 or Rs. 1199834? Rs. 126000 was the stamp duty paid in July 2014. I sincerely request for the clarification from your side. Many thanks and regards.

EMI (INR) - Year - CII - Indexation price (INR)

33600 2004-2005 113 98421

32480 2004-2005 113 95141

31640 2004-2005 113 92680

30800 2005-2006 117 87135

29960 2005-2006 117 84759

29120 2005-2006 117 82382

28280 2005-2006 117 80006

27440 2006-2007 122 74448

26600 2006-2007 122 72169

25760 2006-2007 122 69890

24920 2006-2007 122 67611

24080 2007-2008 129 61787

23240 2007-2008 129 59631

126000 2014-2015 240 173775

Sum of EMI (Rs. 493920) and Sum of Indexation price ( Rs. 1199834 )

Regards

#4

Hi @Sanjay_S

The cost inflation index (CII) for FY 2014 would be 240.

Your queries seem to be personalized. Further, you can book a MEET where a dedicated tax expert can connect with you over a video call, understand your queries, and suggest you the best possible solutions.

#5

Hello @Muskan_Balar - thank you for your response. Everyone ask questions in the forums with a background in my mind. The figures are indicative and imaginary. I thought you will reply as per my raised question. Directing to me for paid consultation of Rs. 999/- at this point of time is not possible since the question has not been answered suitably. Thank you!

#6

Hello @Sanjay_S

The calculation you had done in the above table seems incorrect. Since registration have been done in 2014, CII of 2014 will apply to the Cost of Acquisition.
In your case, if total EMI paid is 493920/-, then Indexed cost of acquisition will be 681,198/- (493920*331/240).

For example if you have sold the property in FY 2022-23 at 10,00,000/- then Capital Gains = 318,802/- (10,00,000 - 6,81,198) and since the property was held for more than 3 years it will attract long term capital gains.

Hope this helps.

#7

@Muskan_Balar

You might be right if you are sure to take 240 as CII when the registration done in July 2014.

I missed to mention earlier:
I received the allotment letter on 10 July 2004 and I received the possession letter on 22/11/2007.
Stamp Duty paid and registration done on 17 July 2014.

Shouldn’t we consider 113 CII since I received the allotment letter on 10 July 2004?

Regards

1 Like
#8

Hi @Sanjay_S

Though you must have received the possession letter in 2007, since the registration was done in 2014, it is advisable to consider the CII value of 2014 -15.

#9

@Muskan_Balar
Here is a read for everyone:

Still should 2014 be considered as CII?

#10

Hi @Sanjay_S

As per law, the registration date is considered. If you want to use the index for 2004 or 2008 you can but there are chances of receiving notice and then you can use these judgments as a reference.

As the answer to this query is a little ambiguous, you can consult any tax expert related to it.

#11

@Muskan_Balar

Sure! Thanks for response.