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Inherited gains

I inherited in 1992 a property which was built in 1975. I want to sell the property now. How shall I compute capital gains? What would be the year of origin that is to be taken into consideration while computing capital gains? Who is the relevant authority to determine a fair value of the property?
Animesh Dutta, Salt Lake
Long term capital gains on sale of a property is computed under section 48 of the Income Tax Act. It is the difference between your sales consideration and the indexed cost of acquisition of the property.
If you are selling the property in 2012-13, indexed cost of acquisition is equal to fair market value of property on April 1, 1981 or cost of construction in 1975, whichever is more, multiplied by the ratio of 852 (cost inflation index of 2012-13) and 100 (cost of inflation index of 1981-82).
Indexed cost of acquisition = fair market value x 852/100
Cost of construction of the property in 1975 is deemed to be the cost of acquisition of property by inheritance in 1992 under section 49(1). So, although 1975 will be year of origin, but since the cost at 1975 would be less than the fair market value of the property on April 1, 1981, the latter would be taken into consideration while computing long term capital gains as mentioned above.
Stamp valuation authority of the state government is the relevant authority to determine a fair value of the property at any given time.
Late fee
Will an income tax assessee have to pay penalty if he/she fails to submit tax returns within the due date? If so, how much is the value of the penalty?
P Bose, Howrah
Under section 271F of the Income Tax Act, a sum of Rs 5,000 as penalty can be levied on failure to furnish return of income as required under section 139 before the end of the relevant assessment year i.e., March 31. However, penalty is not leviable if the assessee proves that there was reasonable cause of failure under section 273B of the act.
If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to:, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.
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