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Capital Gain, Income Tax

Issue Id: - 118414
Dated: 11-3-2023
By:- Ethirajan Parthasarathy
Capital Gain

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For purpose of Capital Gain on sale of Capital assets purchased before April’2001, section 55 provides for treating fair market value as on 01/04/2001 as “deemed cost” for purpose of indexing.

There is an explanation in said section clarifying what is fair market value. In the said explanation, there is a proviso which reads

“provided that in case of capital asset referred to in sub-clauses (i) and (ii), being land or building or both, the fair market value of such asset on the 1st day of April 2001 for the purposes of the said sub-clauses shall not exceed the stamp duty value, wherever applicable, of such asset as on the 1st day of April’2001”

There is notification dt:03/12/1998 providing estimated market value of immovable properties for purpose of registration. This has not been rescinded as on 01/04/2001 which means for purpose of registration even as on 01/04/2001, the values mentioned vide notification dt:03/12/1998 holds good & sub-registrar can not demand higher stamp duty even though market value as on 2001 has gone up compared to 1998.

In the light of the above read with the proviso, I feel we are bound to follow the values specified in notification dt:03/12/1998 to calculate capital gain. But there appears to be another view that we can still go for valuation as of 2001by the Approved Valuer because the property value changes depending upon location, size etc.,

Can anybody confirm about getting valuation from Approved Valuer in spite of what is stated in Sec.55

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1 Dated: 14-3-2023
By:- Nikita Rai

Capital gain is the profit or gain arising from the sale of a capital asset, such as property or stocks. Capital gains are taxed under the Income Tax Act, and the tax rate varies based on the holding period of the asset and the taxpayer's income slab.


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