It is computed simiar to Short Term Capital Gains

 

The only difference is that 

1. Instead of COA-

We take ICOA (Indexed Cost of Acquisition)

 

2.Instead of COI

We take ICOI (Indexed Cost of Improvement)

 

What is Indexation

Price of every item increases every year due to inflation.

This is not taken into account while calculating Cost of Acquisition

Hence,Government has introduced the Concept of Cost Inflation Index so that cost is properly adjusted for inflation .

Different Cost Inflation Indexation Factors declared by Government for each year as shown below

Financial Year CII Financial Year CII Financial Year CII
Before 1/4/1981 100 1992-93 223 2004-05 480
1981-82 100 1993-94 244 2005-06 497
1982-83 109 1994-95 259 2006-07 519
1983-84 116 1995-96 281 2007-08 551
1984-85 125 1996-97 305 2008-09 582
1985-86 133 1997-98 331 2009-10 632
1986-87 140 1998-99 351 2010-11 711
1987-88 150 1999-00 389 2011-12 785
1988-89 161 2000-01 406 2012-13 852
1989-90 172 2001-02 426 2013-14 939
1990-91 182 2002-03 447 2014-15 1024
1991-92 199 2003-04 463 2015-16

1081

      464 2016-17

1125


Q4

Suppose jwellery purchased for Rs 100000 on 10 March 2010. It was sold for Rs 130000 on 20 March 2015
Compute Capital Gain

View Answer

Q5

Suppose Mr A Property purchased for Rs 10 lacs on 15 Jan2007. Mr A spent 8 lacs on construction of the house (7 lacs in 2006-07 and 1 lacs in 2007-08).Property was sold for Rs 50 lacs on 20 March 2016.
Suppose Mr A gave 1% commission to Broker on Sale of Property
Compute Capital Gain

CII Index is  
2006-07 519
2007-08 551
2015-16 1081

 -a-

Particulars Amt
Full Value of Consideration 5000000
Less  
Expenses of Transfer 50000
   
ICOA 2082851.638
(1000000*1081/519)  
   
ICOI  
(700000*1081/519)+ 1654184.894
(100000*1081/551)  
   
Long Term Capital  Gain/(Loss) 1212963.468


 

Asset Acquired on or before 1/4/1981

There was no Inflation index prior to 1/4/1981.

If Asset purchased before that date or improvement done before that date, we take Fair Market Value as on 1/4/1981.

 

 

 

Q6
Suppose property purchased on 19/05/1977 for Rs 2 lacs
He spent following amount on construction

FY Amt Spent
1978-79 100000
1985-86 400000

He sold the property on 10 Dec 2015 for Rs 130 lacs

Fair Market Value as on 1/4/1981  was 7 lacs

CII Index is  
1981-82 100
1985-86 133
2015-16 1081
View Answer
  1. Income Tax
  2. Income from Capital Gains

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