Cost of improvement in residential flat in Delhi

In absence of evidences regarding improvements made, it is advisable to get the valuation done and then calculate capital gain taxes.

Further, you may invest in another residential house property in India to claim capital gain tax exemption.

Dear Sir,

Valuation report is required if the property was purchased before 01.04.2001. In your case date of purchase was August 2002 so cost of acquisition will be considered only and the benefit of indexation is available to you.

Valuation report would not work.

Thanks

HI,

You are not required to take the valuation done from the registered valuer in this case for computation of capital gains.

The indexed value shall be computed using the actual cost of acquisition and cost of improvements actually incurred by you.

Thanks

Damini

If you have no evidence regarding cost of iprovements then only option is to get it valued by a registered valuer, but income tax officers are not bound to that valuer report, they can get it valued by their valuer.

Hi,

In the absence of proof of expenses that you have incurred in the improvement of the flat, you will not be able to claim the same. You can get indexation benefit since the property was bought after 2001 and you will need to pay the tax on the capital gains.

Don't you have the supportings for converting the property to freehold from DDA? If you can arrange the supportings, you will be able to claim the expenses incurred on improvement as well.

Regards,

Nikhil.

Sir,

Since you do not have any evidence regarding improvement expenses incurred by you, it is advisable to have it valued by a registered valuer who is registered with Income Tax Department.

However it would always a matter of litigation or debate, and I would suggest you to take advice of your financial expert due to the very nature of work and ambiguity involved.

Hi,

Yeah, valuation is the only option left for you but it's not full proof. You may have to litigate.

Since u purchased property after 2001 ,no need for valuation .you will get indexation benefit on cost of acquisition n cost of improvement .but as you mentioned u dnt have evidence so only cost of acquisition will be allowed.

Hi,

You do not need to approach a registered valuer to determine the value of the property. You would have had to do it, if you had purchased the property before 2001.

Coming to cost of improvement, the onus is on you to prove the cost incurred by you. This could be by way of entries in bank statement, invoices, etc. For example, if you have paid a substantial amount for conversion to freehold, then the document could be a proof and the cost could be determined from the bank entries, if any.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Hi,

The flat was purchased after 1-Apr-2001. So the actual cost will be considered. No need for valuation.

Regarding the cost of improvements, the actual FY in which the amounts were spent for improvements will be

considered. Since you do not have proof for expenses incurred, it is better to go for valuation by Approved Valuer. Even then, the claim cannot be guaranteed if the case is taken up for Scrutiny.

Both the costs of acquisition & improvements will have to be indexed using CII for respective FY and net Capital Gain/Loss should be computed

Dear Sir,

Step 1 - If possible, have your bank statements ready from where you would have incurred the amount by withdrawals.

Option 2 - as you have mentioned, get the house valued by a valuer and ask him to certify the same. It would be really helpful if the valuer you choose is on the panel of Income Tax Department or bankers as they understand the nitty gritty of the department's expectations.

Hello,

In case you do not have any supporting bills/ proof to support your expenses/ cost of improvement it will be very difficult to justify your claim.

I would suggest you look into your bank records if you can find any proof for payment made by your banking system.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP