Sunday, February 26, 2012

COST INFLATION INDEX 2011-12 FINANCIAL YEAR 1981-2012


on Sunday, February 26, 2012

Cost Inflation Index for Financial year 2011-12 has been notified by CBDT vide his circular 35/2011 dated 23.06.2010. This New index figure is to be used to calculate Long term capital gain on the sale of capital assets during Financial Year 2011-12.Further Cost inflation index from 1981-2012 in sheet shown below ,which can also be downloaded in pdf format from the link given in the sheet.Cost inflation Index to be used to calculate the Index cost of Capital asset sold in case of long term capital gain.

To calculate Indexed cost ,cost of asset is to be divided by cost inflation index of year in which asset has been acquired and multiply by CII of year in which asset has been Sold .

COST INFLATION INDEX FOR FINANCIAL YEAR 2011-12


COST INFLATION INDEX FOR FINANCIAL YEAR 2012-13 is available here 


NOTIFICATION NO. 35/2011 [F. NO. 142/5/2011-TPL], DATED 23-6-2011

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes number S.O. 709(E), dated the 20th August, 1998, namely :—
In the said notification in the Table, after serial number 30 and the entries relating thereto, the following serial number and entries shall be inserted, namely :—

"31
2011-12
785"



COST INFLATION INDEX FOR FINANCIAL YEAR 2012-13 is available here 

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  1. Hi,

    This is great a info indeed. Although one question; What if the property purchased before 1980 (say ancient property purchased in 1965 at 1000 Rs) how CII will be calculated or benefited at the inflated property selling price in 2012? (say 2012 current cost is 20 lakhs)

    ReplyDelete
  2. Dear suresh

    To calculate Indexed value for asset acquired before 01.04.1981 . Take asset fair value(market value) on 01.04.1981 and take original cost or fair value on 01.04.81 which ever is higher to compute the indexed value.

    suppose in you given situation fair value as on 01.04.1981 is 5000 then cost (1000) or Fv=5000 which ever is higher to be taken so take 5000/-and indexed it accordingly

    ReplyDelete
  3. if i purchased a plot in feb 1999 and sold in jul2011. how indexation will apply. moreover wat about registration charges etc.

    ReplyDelete
    Replies
    1. cOST OF PLOT X 785/351

      further registration charges are part of cost .

      Delete
    2. sir the registration charges will be included in the cost of acquisition. Cost of acquisition as on 1999 * 351/711

      Delete
  4. not only Registration charges but also the brokerage paid to the agents at the time of purchase will form part of the cost of acquisition.

    ReplyDelete
  5. Will the brokerage paid to the agent at the time of sale also be deducted from the sale proceeds for Indexation calcuation?

    ReplyDelete
    Replies
    1. yes , brokerage charges can be reduced from sale price .Further indexation is available only when brokerage is paid for purchase of capital asset

      Delete
  6. i purchased 100 shares of reialiance in 1991 with rate of 500,now if sell now with rate of 1100,what would be tax liabilty,illustrate

    ReplyDelete
    Replies
    1. Long term capital gain(holding period more than one year) on shares is fully exempted .So in your case no tax liability at all so no example required.

      Read more: http://www.simpletaxindia.net/2011/06/cost-inflation-index-2011-12-financial.html#ixzz1sQlMC7gn

      Delete
  7. Dear all,
    Could any body tell me that-
    -How can i get to know the value of inheritage property in 1981
    -give me an example that how can i calculate the taxable long term capital gain on inheritage property if i sale it by this month only.
    - my property is more then 70 year old in delhi.

    ReplyDelete
    Replies
    1. There is certified profession valuer in the market Just search them or get the value from identical /nearby property from registrar office. I think first option is better.
      Further you can add indexed cost incurred after 1981 in price discovered above.

      Delete
  8. Hi,

    I'm going to sell my independent floor. Could you please let me the various costs that will be accounted under "costs of acquisition"?

    Is registry cost a considered cost of acquisition?

    Thanks,
    -Raj.

    ReplyDelete
    Replies
    1. Any expenditure incurred in connection with such purchase, exchange or other transaction eg. brokerage paid,registration charges and legal expenses etc.., also forms part
      of cost of acquisition.

      Delete
    2. sdfkghj.;hjk//h/

      Delete
  9. Hi,

    I am holding an investment with mutual fund of 1 lac which is bought in the year 2011 - May. I am a NRI Holder. Last week i have sold a partial units worth 15000.00 for which i have been charged a TDS with indexation @ 20.60 by an AMC(categorized as non equity scheme).

    Please help me out whether this deduction is applicable for me or not as i have sold partial units.

    ReplyDelete
  10. 1989 Land purchased thru BDA Auction BANGALORE in wife's name
    1991 Construction completed and occupied
    2006 Renovation done with Bank Loan (wife's account)
    2012 August expecting to Sell House
    We r both Sr Citizens now
    Pl let know
    1. how to calculate
    2. Can Sale proceeds be divided 50:50 between me & wife
    3. How is capital gains calculated
    4. If we Need to take Capital Gains Bonds fron NABARD/REC etc should we split and give individually?
    Pl help

    ReplyDelete
    Replies
    1. 1.please fill tentative amounts against each time amount against each item
      2. Sale proceed can be used as your wife wish.but capital gain remains in your wife's account.
      3. As per answer 1
      4. as the land is in your name , capital gain bond must have been purchased in your wife's name

      Delete
    2. Tentative,Figures for calculation
      1.65 lacs = 1989 Land purchased thru BDA Auction BANGALORE in wife's name
      5.00 lacs =1991 Construction completed cost...
      12.00 lacs= 2006 Renovation done with Bank Loan (wife's account)
      115 lacs = 2012 Sale value expecting

      Delete
    3. Sale Value:115.00 L
      Less:expenses from sale(like brokerage etc)=0.00
      1.Net sale proceed

      2. Indexed cost of acquisition

      Land =1.65 X 860(expected index for 12-13) /172(index 1989-90)
      =1.65 X 860 /172=8.25

      const =5.00 X 860(expected index 12-13) /199(index 1991-92)
      =5.00 x 860 / 199=21.39

      renovation cost
      =12.00 X 860(expected index 12-13) /519(index 2006-07)

      =12.00 X 860/519=19.88

      Total cost of acquisition= 8.25+21.39+19.88=49.52

      Capital gain :Net sale minus indexed acquisition cost
      =115-49.52=65.48

      To save capital gain of 65.48 lakh in new house under section 54 or you can invest the same amount(65.48) in Capital gain bonds.

      Further your wife can use claim 54 and 54EC simultaneously in any ratio.

      more over balance amount of 49.52 can be used as your wife wishs..

      Delete
    4. Thanks.
      I have some more queries :
      Can I deduct any Yearly Maintenance cost?
      Which r the expenses that r allowed under MAINTENANCE?
      Is Brokerage paid while selling part of allowed deduction
      Is interest incurred on Bank loan taken for Renovation deductible

      Delete
    5. point wise answer is given below

      Can I deduct any Yearly Maintenance cost?

      Yearly maintenance cost is nor deductible.

      Which r the expenses that r allowed under MAINTENANCE?
      as per above answer

      Is Brokerage paid while selling part of allowed deduction

      Yes brokerage and other selling expenses can be reduced from sale proceed.

      Is interest incurred on Bank loan taken for Renovation deductible

      interest paid for the period falling after the date of acquisition, in my view it cannot be considered as 'cost of acquisition' of a capital asset hence can not be allowed.

      Delete
  11. Plz clarify on Indexed cost for equity funds more than 1 year which qualifies LTCG?

    ReplyDelete
    Replies
    1. Indexed cost of equity funds is not required as these are already covered under ltcg exemption . IF holding period is more than one year no tax applicable.

      Delete
  12. I am planning to sell a property i purchased in 2006.

    Q.1 My builder had charged me 80000 as society formation charges. Can I add it to my cost of purchase.

    Q.2 My broker had taken his brokerage in cash and had given me no receipt for the same. Can i add it to my cost.

    ReplyDelete
    Replies
    1. In my view society formation charges are not part of the cost.

      In case of brokerage in cash ,if you can prove that then you can add that amount

      Delete
  13. Hi

    I sold me house on 2nd April 2012 (signed sale deed on this day). I received some advance payment in the month of March 12. Also, sale agreement was signed in the month of March.
    Should I declare my Capital Gain tax in the assessment year 2012-13 or should be it be 2013-14 ?

    Thanks

    ReplyDelete
    Replies
    1. if possession is handed over in april and registration of property is also held in april then capital gain shall be treated in Fy 2012-13

      Delete
  14. I booked a flat in Nov, 2004 for 25 lacs. Then I got possession and registry in May, 2010. After that I sold it this year with registration in April, 2012.
    Can I apply cost-indexing on cost as total amount was paid in 2004?

    ReplyDelete
  15. 1) I booked an apartment in 2005 and started making regular payments. I got possession in Feb-2008. which year's CII should I use to calculate the cost of acquisition?
    2) Can I add to the acquisition cost, the interest paid on my housing loan between 2005 and Feb-2008?

    ReplyDelete
  16. I had purchased HDFC Mutual Fund HDFC FMP in the month of April, 2012,
    I want to know whether the final payment recd after maturity is taxable or not? If taxable what are the tax rates/ how the tax will be calculated, if I get the payment during this financial Year or if I get the payment after 372 days time.

    Thanks / Regards

    ReplyDelete
    Replies
    1. In FMPs, long-term Capital Gains are taxed@10.30% without indexation, while short-term (period less than 1 year) are taxed as per income slab.

      Delete
    2. If you avail indexation then rate will be 20%

      Delete
  17. sir+ will the capital gains tax be 20% for other assets (plot of land purchased in 1985) even if indexation benefit is not sought??

    ReplyDelete
    Replies
    1. Tax rate @ 10% in LTCG without indexation is available in case of securities only not for other assets

      Delete
  18. hi i have two houses, these two are sold in dec,2011 and puchase two houses at feb,2012. on the sale first house get a profit of Rs.3500000, and second house loss of Rs.700000/ please tell me what is the tax treatment. (new houses cost is 3000000 and 1500000

    ReplyDelete
    Replies
    1. You have not provided holding period for both the houses . I assume that both the houses are held for more than 3 year (long term capital gain applicable)
      Capital gain from first house=35 Lakh
      less :capital gain from second house =-7lakh
      net capital gain =28 lakh.
      less deduction u/s 54 for purchase of new house against sale of first (profitable house)=30lakh subject to maximum profit available i.e 28L
      Net taxable capital gain =Nil
      Note :This is subject to assumption that both the houses are held for more than 3 years

      Delete
  19. I booked a flat with a builder in 2006 and paid 1650000 to him till 2011 ( 950000 HDFC loan and 700000 self) . The builder could not hand over the possession and i sold the flat before taking possession in 2011 – april at the same price 1650000. I paid 350000 rs. interest to HDFC during this period. Can i claim long term capital loss of 350000 now. Please advice.

    ReplyDelete
    Replies
    1. you can claim indexation at least. But long term capital loss can be adjusted against long term capital gain only .So no real benefit till you have LTCg from any other asset .

      Delete
  20. Purchase Price & Date : September 1972 Purchase Price is 26,875/-
    Expenses : Rs. 3,00,000/- Expenses incurred in 1979 for New Room Construction (Not Any Bill)
    Area : Four Bunglow Andheri West
    Carpet Area : 485sq ft
    Sale Price & Date : August 2011 Sales Price is 60,00,000/-
    I require 1981 price on your Letter Head, for Calculation of Capital Gain Tax.

    ReplyDelete
    Replies
    1. Sorry ,try from some architect or approved valuer.

      Delete
  21. Hi. I am selling my apt and wanted to know if I can include the following as cost of the flat for indexation and tax calculation purpose -
    1. Wood work & electrical fittings done in the house on possession.
    2. Interest paid on home loan from bank.
    3. I had borrowed some money from a relative also and paid him some interest also.

    ReplyDelete
  22. Hi,
    I have taken new flat for which the registration date was oct 2009 & possession date was January 2011. Now I want to sell my flat. Then to claim long term capital gain, when should I sell it? which is the criteria date for 3 yrs completion, registration date or possession date? Also I am having 75% loan of flat cost. Please help. Thanks in advance.
    Regards,
    Ameya

    ReplyDelete
  23. Hi,

    Please reply to my following queries:
    1. Land purchased in chennai in 1996 for Rs.60,000/-
    2. Power given to a builder for construction of flats in 2012.
    3. As per Jv 40% of the sale proceeds to me Rs.60,00,000/-
    4. Out of 60L I am going to purchase flat for 36L. He says he register the UDS for the flat only in my wife's name and can't be registered back in my name. Is that so?
    5. Balnce 24L he will give cash which I will invest in house in our joint name (self & wife)

    Please let me know the capital gain and tax implication and how should I go about.
    thanks.

    ReplyDelete
  24. Sir , We purchased a plot for Rs 7500/- in 1957. Same has been sold for Rs 19,00,000/- in 2012. What is the capital gains in this case.?

    ReplyDelete
    Replies
    1. get price of 1981 for certified valuer and multiply current year index(yet to be declared Tentative is 870) and divided by 100 .

      you will get cost of acquisition , deduct it from net sale price and balance will be capital gain.

      Delete
  25. Mr Suresh sold his house on 1 May,2009 ofr Rs.12,00,000.This house was purshased by his father in 1960 for Rs 50,000.Mr Suresh got this in heritance by his father in 1977-78. On 1.04.1981 fair market value of this was rs 150,000.On 1 December,2009 he purchased another house for Rs 2,50,000. For the assessement year 2011-2012 calculate his capital gains

    ReplyDelete
  26. The ancestral property of the year 1920 has been passed on to my grandfather’s generation in the may 2012 and my father and his two brothers received it in the month of august 2012. My father and his two brothers got 270 sq yards of urban land each. Now I wish to purchase the land of 270sq yards from one of my uncle [dad’s brother]. The present government value of the property is 27k per sq yard and the market value of the property is 60k per sq yard. So could you please clarify me the total income tax / capital gain that my uncle be liable to pay in detail. The property is in Andhra Pradesh. I would really appreciate your response. Please explain
    Kumar

    ReplyDelete
    Replies
    1. You can give this transaction as a family settlement and there is no tax on family settlement . So think about this and take hep of tax consultant as amount involved is huge.

      Any how ,if this transaction remains covered in Capital gain then to calculate capital gain ,cost as on 01.04.1981 of this property required .

      then d this
      Sale Price =XXXXXXX
      Less :Market value on 1.4.1981 X Index 2012-13(880 Estimated ) divided by 100= YYYYYY
      Capital Gain =XXXXXX-YYYYYY

      Further your uncle can save capital gain by investing in new property /capital gain bonds

      Delete
  27. I have sold a commercial property and received 90% payment in 2011-12 but not executed the sale deed till date. Is the long term capital gain tax payable in the year in which on execution of sale deed is done ?

    ReplyDelete
    Replies
    1. If you have not given possession to buyer then it is not taxable in 2011-12

      Delete
  28. Sir, this is the question i Have in my AcademicS.

    Kindly Solve with an Detailed Description. Plz

    Mr Suresh sold his house on 1
    May,2009 ofr Rs.12,00,000.This
    house was purshased by his
    father in 1960 for Rs 50,000.Mr
    Suresh got this in heritance by his
    father in 1977-78. On 1.04.1981
    fair market value of this was rs
    150,000.On 1 December,2009 he
    purchased another house for Rs
    2,50,000. For the assessement
    year 2011-2012 calculate his
    capital gains

    ReplyDelete
    Replies
    1. Sale price =12,00,0000
      less :indexed cost
      1,50,000 X 632=948000
      Net capital gain=12,00,000-948000=252000
      less Invested under 54 (new house)=250000
      Net capital gain chargeable =2000

      Delete
  29. Dear Sir,
    I have purchased 1-BHK flat in 2006-07 for 8 lacs.I have taken home loan for the same and cleared the loan in next 4 years. I paid the total bank intrst around 2 lcas on the loan.Also spent around two lacs on household furniture.

    Afterwards,I purchase a 2-BHK flat in 2011-12 for 35 lacs with 25lacs homeloan.

    Now I want to sell my old one-bhk flat & want to put the entire money for partpayment of new homeloan taken on 2-bhk flat.

    Will I have to pay any longterm capital gain tax? if yes how much?
    Thanks in advance for your reply



    ReplyDelete
    Replies
    1. What is expected sale consideration of old house

      Delete
  30. Dear Sir,
    Please help me the following case.
    Sold a flat (flat1) purchased in wife's name. Flat was fully funded by me. Capital gain comes around 30 lakhs. Want to invest in a new flat (flat2) to save long term capital gain. New flat (flat2) is going to cost around 65 Lakhs. Wife is housewife and has no income. I was earlier clubbing the rental income (from Flat1) in my income and paying taxes accordingly.
    Question is: 1) the new flat (Flat2) should be purchased in wife's name or it can be in joint name or it has to be in my name.
    2) Also in IT return in whose return form this capital gain should reflect. It should come in my ITR or in wife's ITR. (Wife has no income and not filing returns but has PAN card).
    Interested to purchase the new flat (Flat2) in joint name.

    ReplyDelete
  31. Dear sir,

    I bought a flat under construction that was registered in May 2008, but handed over to me in Feb 2010. What should be considered as the property purchase date while calculating the capital gains?

    Many Thanks

    ReplyDelete
    Replies
    1. on safer side you should consider on FEb 2010

      Delete
  32. Hi, I brought a flat in FY 2005-06 for 1430000/- and sold in FY 2012-13... what would be the capital gain?

    Do I need to use this entire amount to buy new house so that I don't have tax liability ?

    What if I have used some amount out of it i.e. 1500000/- to clear home loan which was running on the house which i sold ? So do I need to buy next house for: capital gains amount - Rs. 1500000

    When I buy a new house, purchase date is considered as date of allotment or date of possession since it is under construction....

    ReplyDelete
    Replies
    1. To calculate capital gain sale value is required ,which you have not provided.we are assuming it as 3500000 .so capital gain is as under
      sale value =3500000
      minus Indexed cost of house =1430000*852/497=2451429
      capital gain=3500000-2451429=1048571

      From above figures ,to save capital gain you have to invest only capital gain amount i.e 1048571

      balance amount can be used as you wish(2451429)including repayment of loan.

      construction of house must be completed with in three years from transfer of old house.

      Delete
    2. Sorry I forgot to mention Sale amount as Rs. 7000000. If I use formula as mention above then 7000000-2451429 = 4548571.

      Do I need to use this 4548571 for buying new house and escape tax liability or can I use this amount to also close my ongoing home loan on same flat which I sold and rest to buy new house ...

      Delete
    3. Amount to amount co relation is not required ,Minimum requirement is to invest amount equal to capital gain in new house .In this case amount is 4548571/-.

      Delete
    4. Hello, I think I am not clear about my request and sorry to bother you again.

      Let me re-phrase my question:

      Brought flat in FY 2005-2006: 1430000/-
      Taken loan to pay to first party: Rs. 1300000/- + 400000/- for renovation, hence total loan: 1700000/-

      Sold same flat in FY 2012-2013 : 7000000/-
      Since I need to close home loan before I sell, I used token money which was paid by buyer of my house i.e Rs. 1500000/-
      After paying Rs. 15 Lakh I got documents and hence gave those documents to buyer on payment of rest of the amount 70Lakhs-15Lakhs= 55 Lakhs

      Since I have used Rs. 15 Lakhs from my capital gain hence Shall I use rest of the money i.e. Rs. 4548571 - 1500000 = 3048571 for buying new house and not liable to pay tax.

      regards

      Delete
    5. No ,answer remain the same i.e you have to invest 4548571/- .

      However as you have told that you have renovate the house and take house loan for that 4 lakh and i thing you may have used your own money on renovation also.so both this amounts are also to be considered to calculate capital gain tax.

      Further if you have paid any registration charges or transfer charges i.e also to be included in cost of acquisition .

      I assume that you have used 5 lakh for renovation (4 lakh received from bank and one lakh own) so revised calculation is given as under
      1430000+400000+100000=1900000
      Indexed cost =1900000*852/497=3257143

      salevalue=7000000
      less cost=3257143
      capital gain=3742857

      Delete
    6. Hello Sir, thank you for your support so far.

      Just last question.... I heard from one of the CA that capital gains amount can be invested to buy new flat before you file return and an individual can file return with delay of 1year but with some panelty so in case above if someone has sold house on 01st April 2012 then one can actually wait untill 31st July 2014. This will give more time i.e. 2yrs to utilise money instead of parking it in capital gains account.

      Please confirm if money has to be used by 31st July 2013 or can go untill 31st July 2014?

      thank you

      Delete
    7. Income tax return section is 139

      Normal return is covered in section 139(1) and late return is covered under section 139(4).

      As per section 54 return section referred as 139 means both in time return and late return is covered and your CA is correct.(belated return can be filed up to 31.03.2015

      However as per CGAS section is 139(1) means in time return

      "(4) Such deposits may be made in one lump sum or in instalments at any time on or before the due date of furnishing the return of income under sub-section (1) of section 139 of the Act as is applicable in the case of the depositor."

      so there is diff in Section and Capital gain account scheme notification and ITO can create dispute ,so be careful and take risk after taking all points in consideration

      Delete
    8. Thank you for your comments. Please confirm if belated return for FY 2012-2013 can be filled till 31.07.2014 or 31.03.2015? as per above stated section 139

      Its irony that there is diff in two notifications from government.

      Delete
  33. Dear Raju Baba,
    Our property was purchased in 1949 for Rs. 30,000/- by grandparents. What is the indexation rate, and what would be the amount of the capital gains tax, if sold at Rs. 8 crores? After paying the tax, can the money be repatriated to the US without any hassle? How efficient is the process of taxation once property is sold? Is the tax paid upfront or filed at the end of the year?

    ReplyDelete
  34. Dear sir: I have acquired a flat through a cooperative society that was constructed and related capex incurred over a period of 8 years during 1981-82 to 1989-90 and it was sold in 2012-13. For assessment of capital gains and tax thereon, is indexation of capital cost of this flat to be done for all the years of construction for the respective capex incurred by the respective years' index factors or for the cumulative capex since inception upto the year of completion of construction by the index factor of that year alone ? Thanks in advance for your clarification:

    ReplyDelete
  35. you should apply CII notified for different years to the amount spent on construction every year.

    ReplyDelete
  36. Dear Sir, I had constructed a house for Rs 2500000 in year Dec-2005. I'm planning to sell it now in April-May 2013. What is the CII of year 2012-13 and 2013-14. Which year CII would apply in my case?

    ReplyDelete