Blog Post
Mar 13, 2025
Income Tax on amended LTCG
Suppose a person acquired a residential house property on 1.7.2006 at cost of Rs.25,00,000 and spent Rs.5,00,000 towards cost of improvement and sold this property at Rs.1,30,00,000 on 1.2.2025, then what would be Long Term Capital Gain (LTCG) and income tax applicable thereon?
Cost of acquisition is = Rs. 30,00,000 (inclusive of cost of improvement)
Sale value = Rs.1,30,00,000
Net Long Term Capital Gains = Rs.1,00,00,000
Income Tax @12.5% on above LTCG = Rs.12,50,000 without applying Cost Inflation Index (CII) benefit since the house sold after 23.7.2024 [as per Section 112(1)].
But if the above property was sold on any date between 1.4.2024 and 23.7.2024, then by applying the Cost Inflation Index of 117/2006-07 and 363/2024-25 as per Section 48, the indexed cost would be Rs.93,07,692 and the LTCG thereon would be Rs.36,92,308 (30,00,000 * 363 / 117) and Income Tax @20% would be Rs.7,38,462 on such LTCG, and thereby he could saved Rs.5,11,538 towards Income Tax.
And, to save Income Tax on LTCG, as per Section 54(1) of the Income Tax Act, 1961 -
(i) if the person purchase or construct another one/two residential house(s) at Rs.90,00,000 within a period of 1 year before, OR within 2 years after, of 1.2.2025, then the LTCG of Rs.10,00,000 would be charged (during the financial year in which the new house completed or bought) under Section 45 of the Act as his income under head Capital Gains;
(ii) if the person purchase or construct another one/two residential house(s) at Rs.1,00,00,000 (or above) within a period of 1 year before, OR within 2 years after, of 1.2.2025, then the LTCG would be NIL (during the financial year in which the new house completed or bought) under Section 45 of the Act as his income under head Capital Gains.