I’m within the means of promoting a property of carpet space 584.64 sq ft in Mumbai’s Oshiwara. I wish to know if I can add the next bills to the acquisition value. These embody brokerage for buying the flat bequeathed by my mom, expenses for renovation carried out in 2001, repairs and upkeep value, stamp responsibility and registration expenses, probate expenses paid to the courtroom.
— Jagdish Shah
The listed value of acquisition of the asset could be calculated as the price of acquisition or truthful market worth (FMV) as on 1 April 2001 / value inflation index (CII) of FY 2001-02 (i.e. 100)*CII of the yr of sale.
Additional, if the precise sale consideration is decrease than the stamp responsibility worth by greater than 10%, the stamp responsibility worth could be considered the deemed sale consideration, for the aim of calculating such long-term capital achieve/ loss (LTCG/L).
Because the property was bequeathed to you , the price of acquisition for you may be the associated fee to the earlier proprietor. Additional, as per part 55 of the Revenue Tax Act, the price of acquisition of immovable property bought on or earlier than 1 April 2001 shall be the precise value of acquisition of such asset or the FMV of the property as on 1 April 2001, on the possibility of the taxpayer.
As per the info offered, it seems that the property was bought by your mom in 1993, nonetheless, it’s not clear whether or not the property was transferred to you earlier than 1 April 2001. Assuming that the property was transferred to you after 1 April 2001, the price of acquisition of such asset in your arms shall be deemed to be the precise value of acquisition within the arms of your mom as elevated by the price of enchancment, incurred by you.
Whereas computing the price of acquisition within the arms of your mom, it’s essential to examine the FMV (as prescribed) of the property as on 1 April 2001 vis-à-vis the precise value of acquisition (together with brokerage bills, stamp responsibility expenses, renovation, and so forth. incurred earlier than 1 April 2001) and take into account the upper quantity as deemed value of acquisition within the arms of your mom, at your possibility. You might additional add the bills incurred by you submit 1 April 2001 in the direction of renovation and so forth. (if leading to enchancment/alteration within the asset) as value of the development. For the reason that definition of the time period ‘value of enchancment’ shouldn’t be free from litigation, one must look into the info of the case intimately as as to whether the bills incurred for acquiring probate order had been resulting in any form of enchancment or not.
Additionally, it’s essential to have the suitable documentation in assist of the bills incurred for the property to contemplate the identical as the price of acquisition/enchancment.
It’s to be famous that the restore and upkeep bills are usually thought of as routine bills for the maintenance of the property and aren’t thought of as capital expenditure therefore not includable as the price of enchancment. Individually, you’re entitled to cut back the bills incurred for the switch of the property (together with brokerage bills) from the sale consideration to compute the taxable capital achieve earnings.
Parizad Sirwalla is companion and head, international mobility providers, tax, KPMG in India.
Supply: Live Mint