Capital Gains on sale of a part of the Property

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  1. Joseph Fernandez

    Joseph Fernandez New Member

    I am a retired person.
    While employed, I purchased 16 cents of land in 1984 and built a house by availing a bank loan of Rs. 1 .10 lakhs. The cost of land was Rs. 3000 per cent.
    I have now sold 6 cents of land for a total Rs. 20 lakhs and gifted the remaining land to my brother.

    I utilized the land sale proceeds to repay a car loan and have deposited the balance in term deposit in a bank.
    I still have an outstanding housing loan and my son's education loan totaling Rs. 8 lakhs. In fact, I sold the land to close my loans.

    Do I have to pay capital gains tax on the sale proceeds?
    If so, how do I know the amount? How do I pay the tax? What would the amount be like?

    I hope somebody guides me.
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    No Tax would be levied on the 10 cents of land which you've gifted to your brother.

    You can use the money in any form whichever you like. This maybe loan repayment or purchase of car etc. No treatment for the manner in which the amount has been put to use.

    Tax would only be required to be paid on the Capital Gains arising on the sale of 6 cents of land and would be computed as follows:-

    Proportionate Cost of Acquisition of 6 cents= 18000
    Proportionate Cost of Improvements of 6 cents = 41250

    This proportionate cost would be then be indexed and the capital gains computed accordingly.
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