Basics

Income Tax
Income from Capital Gains

It is computed similar to Short Term Capital Gains

The only difference is that

We take ICOA (Indexed Cost of Acquisition)
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 Before 1/4/2001 100 2010-11 167 2001-02 100 2011-12 184 2002-03 105 2012-13 200 2003-04 109 2013-14 220 2004-05 113 2014-15 240 2005-06 117 2015-16 254 2006-07 122 2016-17 264 2007-08 129 2017-18 272 2008-09 137 2018-19 280 2009-10 148

Q4
Suppose Jwellery purchased for Rs 100000 on 10 March 2010. It was sold for Rs 130000 on 20 March 2018

Compute Capital Gain

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 2018.

Suppose Mr A gave 1% commission to Broker on Sale of Property

Compute Capital Gain

 CII Index is 2006-07 122 2007-08 129 2017-18 272

Asset Acquired on or before 1/4/2001

There was no Inflation index prior to 1/4/2001.

If Asset purchased before that date or improvement done before that date, we take Fair Market Value as on 1/4/2001.

Q6
Suppose property purchased on 19/05/1977 for Rs 2 lacs

He spent following amount on construction

 FY Amt Spent 1999-2000 100000 2003-2004 400000

He sold the property on 10 Dec 2017 for Rs 130 lacs

Fair Market Value as on 1/4/2001  was 7 lacs

 CII Index is 1999-2000 100 2003-2004 109 2017-18 272