Lets take an example.
· I own a house, which has a market value of 5 lacs.
· I bought it 10 years ago, when it was worth 1 lac rupees.
· The registered price of the house was 0.5 lacs.
· And now after the indexing and all, it’s actual cost has come to 2 lacs.
Please tell me how can I treat the additional income earned by me (5-2= 3 Lacs)?
I suppose that the differential between the Registered value (1 Lac) and Today's value (2 Lacs) which is 1 Lac is taxable as long term capital gains, until I invest it somewhere, but what about those 3 Lacs that I have earned?
Is that income shown somewhere to the Tax Authorities and under what head? And if not, how can I buy another property with those 3 Lacs (as I will have to anyways reveal the source of funds to Income Tax Department)
Also, how can I utilize those 3 Lacs, such that I don't have to pay 60 Lacs (@20%) as tax? A bit lengthy, but that's what I need to know. Can you help Soni?