NEW DELHI: The price of acquisition of actual property properties bought earlier than 2001 would be the truthful market worth (FMV, not exceeding the stamp responsibility worth) as of April 1, 2001, or the precise value of the land or constructing for the aim of calculation of long-term capital gains (LTCG) tax, the I-T division has stated.

The indexation profit allowed taxpayers to compute beneficial properties arising out of sale of capital property after adjusting inflation.

For properties bought earlier than 2001, truthful market valuation (not exceeding the stamp responsibility worth) can be utilized as a base to find out the listed worth. The listed worth will then be diminished from the sale worth for calculating LTCG that can be taxed at 20 per cent.

In a publish on X, the I-T division stated a problem has been raised as to what can be the price of acquisition as on April 1, 2001, for properties bought previous to 2001.

For properties (land or constructing or each) bought previous to April 1, 2001, the price of acquisition as on 1.4.2001 shall be the price of acquisition of the asset to the assessee; or the truthful market worth (not exceeding the stamp responsibility worth, wherever accessible) of such asset as on April 1, 2001.

“Taxpayers can select both possibility…,” the I-T division stated in a X publish on Thursday evening.

The I-T division gave an instance as to how capital beneficial properties tax can be calculated in case of properties bought previous to 2001.

It cited the instance of a property whose value of acquisition in 1990 was Rs 5 lakh and as on April 1, 2001, its stamp responsibility worth was Rs 10 lakh, and the FMV was Rs 12 lakh.

If that is offered on or after July 23, 2024, at Rs 1 crore, the price of acquisition as on April 1, 2001, can be Rs 10 lakh (decrease of stamp responsibility or FMV).

The listed value of acquisition in 2024-25 fiscal yr is Rs 36.3 lakh (Rs 10 lakh*363/100). 363 is the price inflation index for FY25 notified by the I-T division.

The LTCG in such circumstances is Rs 63.7 lakh (Rs 1 crore minus Rs 36.3 lakh). At a tax price of 20 per cent, the LTCG tax for such properties can be Rs 12.74 lakh.