Section 45(1) of the Income Tax Act, 1961, clearly states that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in Sections 54, 54-B, 54-D, 54-E, 54-EA, 54-EB, 4-F, 54-G and 54-H be chargeable to income tax under the head “Capital gains”, and shall be deemed to be the income of the previous year in which the transfer took place. Therefore, if there is any profit or gain arising from the above transfer, then capital gains tax will have to be paid. This is irrespective of whether the property was acquired on GPA.
Section 48 of the Income Tax Act lays down the mode of computation of the capital gains. It is computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:—
(i) expenditure incurred wholly and exclusively in connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any improvement thereto.
Since in your case, long-term capital gains arise from the said transfer, you are entitled to deduce “indexed cost of acquisition” and “indexed cost of any improvement”.
In cases which are covered under Sections 54, 54-B, 54-D, 54-E, 54-EA, 54-EB, 4-F, 54-G and 54-H of the Income Tax Act, the capital gains tax may not be charged or may be reduced to extent mentioned in those sections, as applicable.
Please consult some CA or some other expert in Income Tax to calculate the actual tax that may be payable on account of capital gains in your case.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
.
