3 Replies to “What is indexing in I. Tax for calculating long term capital gain and how to calculate the same?”

  1. Say, land parched on 1.4.1994; & sold on 1.4.2007

    Now the calculation:
    Index on 1994-95= 259
    Index on 2007-08= 551
    Inflation index cost of land:
    100000*551 / 259= 2,12,741 (indexed cost)
    Land sold for———— = 10,00,000
    Less cost of purchase= 2,12,741 (indexed cost)

    indexing gain———– = 7,87,259
    Tax @20% Flat on gain= 787259*20%=1,57,452
    +3% Education cess on Rs.1,57,452/-=4,724
    Total tax & Educatioin cess 157452+4724=1,62,176/-

    If you have no other income, then you can reduce your basic exemption limit and pay tax on balance amount.

    Example: If you are a male <65 years. Your tax free basic exemption limit is Rs.1,10,000. You have no other income than the above said capital gains. Then your income will be 7,87,259 less 1,10,000= 6,87,259. On this amount you have to pay tax @20%.



  2. Cost Inflation Index
    http://www.allindiantaxes.com/cit.php
    Financial Year
    Index

    1981-82
    100
    1990-91
    182
    1999-00
    389

    1982-83
    109
    1991-92
    199
    2000-01
    406

    1983-84
    116
    1992-93
    223
    2001-02
    426

    1984-85
    125
    1993-94
    244
    2002-03
    447

    1985-86
    133
    1994-95
    259
    2003-04
    463

    1986-87
    140
    1995-96
    281
    2004-05
    480

    1987-88
    150
    1996-97
    305
    2005-06
    497

    1988-89
    161
    1997-98
    331
    2006-07
    519

    1989-90
    172
    1998-99
    351
    2007-08
    551





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