Date of purchase?

Q. - Dear Ashal,

Thanks for the yeoman service you have been doing to help us with our taxes

Now i had one more query on behalf of my neighbor, can the sale of land that was actually paid for say 10 years back but registered only this month attract capital gains tax if sold today? Or its 3 years from the date of registration thats taken into consideration for capital gains tax.. She bought some plantation property 10 years back on instalment scheme and wants to sell it now though it was registered only last month...Thanks in advance. - Radhika Nandlal

Ans. - Dear RN, from the points mentioned by u, the date of allotment (i.e. some 10 years back) 'll be considered as the date of purchase.

The reason is - Installment scheme of pmt. of the price (as agreed upon at the time of allotment) is merely a mechanism to pay the price over a period of time.

The right on the property were created on the date of allotment itself. In between all these years never ever these rights were questioned & both the parties were following the agreement.

Hence for calculation of Capital gains, the date of allotment 'll be considered as the date of purchase.

There r several instances in court cases where the honorable courts have held the views as stated above.

The details of such court cases can be obtained from various sources - Tax advocates, Tax websites, Taxation experts.

Regarding date of registration I'll only say that it's merely a change of names for the property in question in the records of Registrar of Properties.

Thanks

Ashal