Income tax: How to worth a flat purchased earlier than 2001 for computation of positive aspects

For computation of long run capital positive aspects, we’re getting valuation accomplished as on 1.4.2001 of a flat acquired by my father in 1999 in Chennai. It is being accomplished by a registered valuer. For this goal, the valuer has taken the guideline worth as per the sub-registrar as on 1.4.2001. He has added 13% for the registration charge and stamp responsibility relevant as on 1.4.2001 in Chennai. I wished your recommendation on whether or not the 13% might be added to the rule of thumb worth of land to reach at the price of land.

In case land or constructing has been held by you for greater than 24 months, any revenue made on sale of such property is handled as long run capital positive aspects to be computed in prescribed method. For computing long run capital positive aspects on sale of your property you need to scale back the listed price from the web sale consideration acquired. The listed price of an asset is computed by making use of the fee inflation index, introduced for annually by the central authorities, to your price of acquisition of such asset. 

In case the asset being offered was purchased or acquired earlier than 1st April 2001, the earnings tax legal guidelines permit you to undertake the honest market worth of the property as on 1st April 2001. The earnings tax legal guidelines additional present that the honest market worth as on 1st April 2001 can’t be greater than the stamp responsibility valuation of the property as on that date. Stamp responsibility worth can be known as circle fee or pointers worth in some elements of India.

Since the tax legal guidelines clearly present that the honest market worth as on 1st April 2001, to be adopted as price of acquisition for belongings acquired previous to that date, can’t be greater than the stamp responsibility worth, so even when the valuer provides you the valuation report with pointers worth as added by 13% of stamp responsibility and registration fees, it is possible for you to to take the rule of thumb worth solely as your price of acquisition for computing long run capital positive aspects. 

Balwant Jain is a tax and funding professional and might be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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