How to Calculate Capital Gain Tax ?

In this section we will learn how to calculate Cost Inflation Index & calculate Capital Gain Tax.


COST INFLATION INDEX  TABLE - 

F.Y.	INDEX	F.Y	INDEX	F.Y.	INDEX
1981-82	100	1992-93	223	2003-04	446
1982-83	109	1993-94	244	2004-05	480
1983-84	116	1994-95	259	2005-06	497
1984-85	125	1995-96	281	2006-07	519
1985-86	133	1996-97	305	2007-08	551
1986-87	140	1997-98	331	2008-09	582
1987-88	150	1998-99	351	2009-10	632
1988-89	161	1999-00	389	2010-11	711
1989-90	172	2000-01	406	2011-12	785
1990-91	182	2001-02	426	2012-13	852
1991-92	199	2002-03	447

Formula of Calculation Capital Gain Tax

Cost Inflation Index = ( Index for the year of Sale / Index for the year of purchase) *  Purchase Cost

For example,
My  A   purchase Property  in 10 Jan 01 for 15,24,000  and  sold  it on 15 Dec11 for 35,05,000

Find out Capital Gain ,  first calculate Cost Inflation Index

Cost Inflation Index  =  ( 2011-2012 Index / 2000-01 Index ) * Purchase Cost

                                =  ( 785/406) * 15,24,000

Index Cost of Property     =       29,46,650

Now calculate your Capital Gain
 
Capital Gain        =  Property Sale Price - Index cost of property
                           =  35,05,000 - 29,46,650

Capital Gain        = 5,58,350

Capital Gain Tax  = 20 %  of Rs. 5,58,350  ie. 1,11,670 ( +surcharge ,cess if applicable)

If you are invested   5.60  lakh in Capital Gain Bond , then your tax liability is Zero