My father owned property, for which he executed a partition deed in Nov 1963. I hold my portion of the property till now and now I sold that my portion of property to a buyers in Jan2025.
Details are as under:-
- Total net sale consideration received in my bank account is Rs1811000/-
- Sale deed is already executed.
- Govt. approved valuer has estimated that value of the property is Rs442000/- as on 1st April 2001, which is indexed to Rs1591200 as on Jan 2025.
- As per stamp duty valuation authority, the value of the property is Rs3300000/-
Now, I wish to know as under:
a) What would be long term capital gain and how to compute income tax as per IT act1961? Please consider that Long term capital gain for FY 2024-25 is Rs2000 accruing from sale of shares. Other income will be from pension Rs2005/- per month, interest from bank FDs, SCSS and dividend. Thus my gross income for FY 2024-25 will not exceed Rs550000/-
b) In ITR 2 where I have to show the sale transaction of my property? According to me, such transaction may be shown at Sr. no B item 1 of Schedule CG. If so, then LTCG works out to Rs342000/- as per the instructions noted at Schedule CG Sr. no. B item 1. Please advise me in this matter.
Hello @bjdalwadi
As per the Income Tax Act, if the Stamp Duty Value of a property exceeds 110% of the actual Sale Consideration, the Stamp Duty Value will be treated as the Deemed Sale Value for computing Long-Term Capital Gains (LTCG).
Yes, in ITR 2, the sale transaction of your property should be reported under Sr. No. B1 of Schedule CG.
To compute capital gain on inherited immovable property, follow these steps:
- Determine the property’s Fair Market Value (FMV): On the date of inheritance, the FMV is considered the cost of acquisition. This value is used to calculate capital gain.
- Calculate the Sale Price: When the property is sold, the selling price (after any sale-related expenses like brokerage or legal fees) is the amount you receive from the sale.
- Find the Capital Gain: Subtract the FMV (as of the inheritance date) from the selling price to determine the capital gain.
- Apply Indexation (if applicable): If the property was inherited before 2001, indexation can be applied to adjust the FMV for inflation, reducing the taxable gain. The capital gain is then calculated by adjusting both the cost and selling price for inflation using the cost inflation index (CII) for the relevant years.
- Tax Calculation: The capital gain is classified as long-term if the property is held for more than 24 months, and taxed at long-term capital gains (LTCG) rates, which may be lower than short-term rates.