Query 1]

a) I had purchased a plot in the F.Y. 85-86 for Rs. 23000/- . The cost after Indexation comes to Rs. 122935/-.

  1. b) In the F.Y. 2004-05, I spent Rs. 85,000/- for leveling and fencing. The amount after indexation comes to the 125885/-.
    c) In the current F.Y. the plot has been sold for Rs. 4,90,000/-.
  2. d) The brokerage charges of Rs. 9800/- @ Rs.2% has been paid after sale.
  3. e) In the current F.Y. I have Paid Rs. 2000/- to Government as Land
    revenue (Receipt of previous payment of L.R. are not available and
    hence not considered)
    My queries are:-
  4. Can the amount at (b), (d) and (e) be added to the original
    cost (i.e. amount at (a)) and treat the amount so arrived at as the
    total cost of acquisition (It will come to Rs. 2,60,620/-)?
  5. Since the LTCG is due to sale of a plot, can this amount be
    utilized for purchase of a plot for sale in future, to save the Income

Kindly guide and oblige. []



Long term need to be calculated after deducting from the full value consideration the (a) the Indexed cost of Acquisition, (b) Indexed cost of Improvement. Further deduction is available towards the expenses incurred WHOLLY & EXCLUSIVELY in connection with the transfer.

You can deduct Rs. 1,22,935/- & Rs. 1,25,885/- being indexed cost of acquisition and indexed cost of improvement from the sale consideration. Further you can claim deduction towards the brokerage of Rs. 9,800/- paid by you. No deduction shall be admissible against the LR/ Corporation tax etc payment.


LTCG arising on sale of Plot can be claimed as exempt u/s 54F if the following conditions are satisfied: –
  1. a) The transferor must be individual or a Hindu Undivided Family.
  2. b) The capital gain should arise from the transfer of any long-term capital asset other than residential house property. (If capital gain arises from transfer of a residential house property, an exemption can be claimed u/s 54.)
  3. c) The transferor must, within a period of one year before or two years after the date on which the transfer took place purchase, or within a period of three years after that date construct, a residential house.
  4. d) The transferor does not own more than one house property, other than the new asset, on the date of transfer of the original asset.
  5. e) The assessee shall not purchase any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset or construct any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset.
  6. f) If all above conditions are satisfied, transferor can claim entire LTCG as exempt provided entire amount of sale consideration is invested for new residential house property. If entire sale consideration is not invested then Exempt LTCG shall be Cost of New House * Capital Gain/ Net Sale consideration.
  7. g) U/s 54F, it’s the investment of actual sale consideration that determines the claim of exemption.