CAPITAL GAIN (LAND & BUILDING)
Capital Assets [Section 2(14)]
(a) Property of any kind held by assesse, whether or not connected with business or profession.
(b) Any securities held by Foreign Institutional Investor (FII) which has invested in such securities as per SEBI regulations but does not include:
1. Any stock-in-trade [other than securities referred to in sub-clause (b)]
2. Personal Effects
i. Movable property (including wearing apparel & furniture)
ii. for personal use of
iii. assessee or for dependent family member.
3. Agricultural Land in India situated in RURAL AREA.
Following types of Agricultural Lands are Capital Assets:
a) Agricultural Land situated in Urban area of India
b) Agricultural land situated outside India
Urban Area [section 2(1A)]
(a) Any area within the Jurisdiction of a municipality /Municipal corporation/cantonment board and which has a population of atleast 10,000 OR
(b) Any area within the distance, measured aerially,
(I) Upto 2 kms from local limits of above jurisdiction having population > 10,000 but upto 1,00,000 or
(II) Upto 6 kms from local limits of above jurisdiction having population > 1,00,000 but upto 10,00,000 or
(III) Upto 8 kms, from the local limits of above jurisdiction having population of > 10,00,000.
Personal effects excludes the following: i.e. Following are treated as Capital Assets.
a. Jewellery
b. Archaeological collections
c. Drawings
d. Paintings
e. Sculptures
f. Any work of art
Type of Capital Gain and Duration : (Land or Building or Both)
| Held for a period upto 24 Months preceding date of transfer | Short Term Capital Assets (STCA) | Short Term Capital Gain (STCG) |
| Held for a period more than 24 months preceding date of transfer | Long Term Capital Assets (LTCA) | Long Term Capital Gain (LTCG) |
The Land / Building received in gift, then the period of holding will include period of holding of previous owner.
Computation of Capital Gain [Section 48]
| Long Term Capital Gain | Short Term Capital Gain |
| Full Value of Consideration Less: Expenditure incurred | Full Value of Consideration Less: Expenditure incurred |
| Indexed Cost of Acquisition of LTCA Indexed Cost of Improvement of LTCA | Cost of Acquisition of STCA Cost of Improvement of STCA |
Full value of Consideration for land / Building [Section 50C]:
Sale consideration / Full value of consideration on transfer of Land or Building or both is less then Stamp Value (Jantri Value), then the stamp value so assessed shall be deemed to be Full value of Consideration.
Stamp value does not exceed 105% of consideration received, then the consideration received shall be deemed to Full Value of Consideration.
| Indexed Cost of Acquisition | ||
| Cost of Acquisition of Capital Assets | X | Cost Inflation Index (of FY in which Assets Transferred) |
| Cost Inflation Index (of the 1st FY in which asset held by Assessee) or (of FY 2001-02),whichever is later | ||
| Indexed Cost of Improvement | ||
| Cost of Improvement of Capital Assets | X | Cost Inflation Index (of FY in which Assets Transferred) |
| Cost Inflation Index (of the FY in which improvement has taken place by Assessee or/and Previous Owner) | ||
Cost of Acquisition [Section 55(2)]:
1) If Land / building purchased prior to 01/04/2001, then the original cost of acquisition / FMV as on 01/04/2001, whichever is higher.
2) If Land / building purchased after 01/04/2001, then the original cost of acquisition.
3) If land / building received in gift then the Cost of Previous owner who had actually purchased the capital assets. [Section 49(1)].
Cost of Improvement [Section 55(1)]:
All capital expenditure incurred by on improvement of Capital Assets on or after 01/04/2001.
INCOME EXEMPT FROM COMPULSORY ACQUISITION OF LAND [SECTION 10(37)]
> Individual or HUF
> Compulsory acquisition of urban agricultural land (LTCA or STCA)
> Used for 2 yrs before date of transfer of agricultural purposes by individual/his parents/HUF
> Compensation received shall be exempt from capital gains
Rate of Tax on Capital Gain:
> Tax on STCG is charged @ normal rate of tax which is determined on the basis of the total taxable income of the taxpayer.
> Tax on STCG is charged @ 10% (plus surcharge and cess as applicable) if STCG covered u/s 111A i.e. STCg arising on transfer of equity shares or units of EOMF or units of Business Trust through recognised stock exchange in India.
> Tax on LTCG is charged @ 20% (plus surcharge and cess as applicable)
> Tax on LTCG is charges @ 10% (plus surcharge and cess as applicable)
√ LTCG arising from sale of listed securities and it exceed Rs.1,00,000/- [Section 112A].
√ LTCG arising on transfer of Any securities listed in recognised stock exchange in India, Any units of UTI or MF (whether listed or not) and Zero Coupon Bond.
Exemption from Capital Gain:
| Section | 54: Transfer of Residential Property | 54B: Transfer of Agriculture Property | 54EC: Transfer of LTCA |
| Assessee | Individual / HUF | Individual / HUF | Any Assessee |
| Capital Assets Transferred | Residential House | Urban agriculture land used by assesse / parent for agricultural for minimum 2 years prior to transfer | Land or building or both |
| Nature of Capital Assets | LTCA | STCA or LTCA | LTCA |
| New Assets | One Residential House in India | Agriculture Land (Any Area) | Bonds Redeemable after 5 years (NHAI, RECI, PFCL, IRFCL) Max. Investment Rs.50 lacs |
| Time Period of New Assets | Within 1 year before and within 2 year after transfer or construct within 3 year after transfer | Within 2 year after transfer | Within 6 month of transfer |
| Capital Gain Account Scheme (CGAS) | Deposit in CAGS on or before due date of Return (DDR) u/s 139(1) | Deposit in CAGS on or before due date of Return u/s 139(1) | NA |
| Exemption | LTCG invested in New Assets + deposited in CGAS upto DDR | LTCG invested in New Assets + deposited in CGAS upto DDR | LTCG invested in Specified bonds upto 6 month of Transfer |
| Transfer of New Assets | If New Asset transferred within 3 years from date of purchase/ construction, then Cost of acquisition of new asset Reduced by Capital Gain exempted earlier | If New Asset transferred within 3 years from date of purchase/ construction, then Cost of acquisition of new asset Reduced by Capital Gain exempted earlier | If New Asset is transferred or converted into money within 5 years from date of acquisition., then exempt LTCG taxable in p/y of transfer/ conversion of new asset |
Exemption from capital Gain:
| Section | 54EE: Investment in units of specified funds | 54F: Transfer of LTCA |
| Assessee | Any Assessee | Individual or HUF |
| Capital Assets Transferred | Any Capital Assets | Any Capital Assets (Other than Residential House) |
| Nature of Capital Assets | LTCA | LTCA |
| New Assets | Units of Start up fund Max. investment Rs.50 Lacs | Residential House |
| Time Period of New Assets | Within 6 month of transfer | Purchased 1 year before or within 2 yrs after transfer or constructed within 3 yrs after transfer One Residential house in India |
| Capital Gain Account Scheme (CGAS) | NA | Deposit in CAGS on or before due date of Return (DDR) u/s 139(1) |
| Exemption | LTCG invested in Specified bonds upto 6 month of Transfer | (Cost of New Assets + LTCG X Amt. deposited in CGAS) Net Consideration |
| Transfer of New Assets | If New Asset is transferred or converted into money within 3 years from date of acquisition., then exempt LTCG taxable in p/y of transfer/ conversion of new asset | If New Asset t/f within 3 yrs from date of purchase/ construction, then Exempt Capital Gains taxable in P/Y of transfer of new asset. |
Exemption from capital Gain:
| Section | 54D : Compulsory Acquisition of Land & Building | 54G : Transfer under shifting of Industrial Undertaking | 54GA: Transfer of industrial undertaking to SEZ |
| Assessee | Any Assessee | Any Assessee | Any Assessee |
| Capital Assets Transferred | Compulsory acquisition of Land & Building used for Industrial undertaking in Any Area | Plant & Machinery / Land & Building used for Industrial undertaking in Urban Area | Plant & Machinery / Land & Building used for Industrial undertaking in Urban Area |
| Nature of Capital Assets | STCA or LTCA | STCA or LTCA | STCA or LTCA |
| Conditions | Used by Assessee for Business for 2 years immediately prior to date of acquisition. Above undertaking shifted (in any area) | Above undertaking shifted (to rural area) | Above undertaking shifted (in any area) |
| New Assets | Purchase/ Construction of Other Land/Building | Purchase Plant/Machinery , Purchase /Construct Land/ Building, Including expenses on transfer | Purchase Plant/Machinery, Purchase /Construct Land/ Building, Including expenses on transfer |
| Time Period of New Assets | Within 3 years after transfer | 1 year before or within 3 years of transfer | 1 year before or within 3 years of transfer |
| Capital Gain Account Scheme (CGAS) | Deposit in CAGS on or before due date of Return (DDR) u/s 139(1) | Deposit in CAGS on or before due date of Return (DDR) u/s 139(1) | Deposit in CAGS on or before due date of Return (DDR) u/s 139(1) |
| Exemption | LTCG invested in New Assets + deposited in CGAS upto DDR | LTCG invested in New Assets + deposited in CGAS upto DDR | LTCG invested in New Assets + deposited in CGAS upto DDR |
| Transfer of New Assets | If New Asset transferred within 3 years from date of purchase/ construction, then Cost of acquisition of new asset Reduced by Capital Gain exempted earlier | If New Asset transferred within 3 years from date of purchase/ construction, then Cost of acquisition of new asset Reduced by Capital Gain exempted earlier | If New Asset transferred within 3 years from date of purchase/ construction, then Cost of acquisition of new asset Reduced by Capital Gain exempted earlier |
Author Bio
sir if I am having 100 square yards land and municipality had taken 25 square yards of land for development and I received no compensation. Today I am selling remaining 75 square yards then while computing capital gain for cost of acquisition what amount of land is to be considered whether it is 75 or 100 square yards??
Good