A N Shanbhag: Q & A corner

A N Shanbhag answers queries on capital gains, advance tax and Section 94 (7)

rchase of property under section 54 ?
3. Capital gains from transfer of agricultural land under section 54B ?

Tarkamal Singh

 Long-term capital gains are always computed with indexation. All that one has to do is to take the cost, multiply it with the index for the year of sale or transfer and divide the result with the index for the year during which the asset was purchased.

  

Cost Inflation Index
Financial year	Inflation index	Financial year	Inflation index
1981-82	100	1993-94	244
1982-83	109	1994-95	259
1983-84	116	1995-96	281
1984-85	125	1996-97	305
1985-86	133	1997-98	331
1986-87	140	1998-99	351
1987-88	150	1999-00	389
1988-89	161	2000-01	406
1989-90	172	2001-02	426
1990-91	182	2002-03	447
1991-92	199	2003-04	463
1992-93	223	2004-05	Not declared

 There is no difference in computing long-term capital gains of listed (or unlisted) securities, units, agricultural land or real estate.  In the case of agricultural land, the capital gain may either be long-term or short-term. The action of purchasing any other land, whether in urban areas or otherwise, within two years attracts Section 54B as long as the newly purchased land is used for agricultural purposes.  A friend retired from government service in July 2003 and so received regular salary for four months (April