In 2006, I sold a property that I had bought in 1998. How do I calculate the income tax that I have to pay?

Answer 1

Here is your right answer calculated as per the Indian Income Tax Act.

Suppose you purchased your house at Rs. 100. You also spent some amount for it say, documents charges of Rs.5, etc.
Thus the total cost of acquisition will be Rs. 105.

Now, that 105 paid in 1998 will have to be converted to the same value of amount in 2006. (U know it happens due to inflation.)

For this the income tax department has issued Cost Inflation Indices (CII) The CII for 1997-98 is 331 and 1998-99 is 351. (It means if you have purchased it before 31-03-1998, apply 331 otherwise 351.

The CII for 2005-06 is 497. For 2006-07, it is not issued till now.
(Take 497 if u sold it before 31-03-2006)

There for the indexed cost of acquistion will be===
Rs. 105*(497/331) = Rs. 157.7

Now suppose you sold it for Rs. 200.

there for your taxable gain will be, Sale price - Indexed Cost
Which is = Rs.200 - Rs.157.7

= Rs. 42.3
You will be charged at flat rate of 20% on taxable gains. therefore your tax will be Rs. 8.46.

NOTE: THIS IS JUST AN ILLUSTRATION PLEASE REFER SOME BOOK OR EXPERT BEFORE CALCULATING.

Answer 2

I'm assuming you did not live in that property for 2 of the last 5 years. If that is the case, you need to add up all the expenses you incurred in purchasing it and any improvements.

Your profit from the sale will be taxed at lower Capital Gains rates.

Answer 3

sale price minus Cost of acquisition minus the benefit of indexation under income tax
Income tax department has notified an index that suppose you have bought the property for 1 lakh 10 years ago and you sell for 1.6 lakh if index is 1.6; then no capital gains tax is payable.
Further, there are also ways to save tax by investing in Bonds etc or when you sale a residential property and buy another property.Refer to statutory provisions under Income tax on the link below:
http://allindiantaxes.com/incometaxch-4.php

Answer 4

If you sale property you have to pay capital gain tax. It involves calculation, contact a good C.A.

Answer 5

I'm an accountant in Japan.
Countries has different tax laws.
Because it is natural that tax rate in US is different from that in other country.
Where do you sell your property?
You should contact the local CPA or tax specialist.

Answer 6

consult a CPA or tax specialist