How to calculate index cost of flat? – Property Hotline

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Expert – Jayesh Kariya, Tax Expert

Question: I purchased an under-construction flat in August 2012. I made payments via a construction linked plan. The agreement was executed on August 2012. I recently received possession. If I sell the flat now, will I have to pay short-term or long-term capital gains tax? Also, how can I calculate the index cost of the flat?

Answer: The period of holding for the purpose of calculation of capital gains on transfer of rights to acquire an immovable property should be considered from the date on which possession is received.

Also, there is no question of indexation in case of sale of short term capital asset.

However, it can be argued that the right in the flat was obtained since August 2012 and hence it shall be considered as held for more than 3 years, but this is highly litigative.