STEP 3 · CAPITAL GAIN JOURNEY

Method A or Method B?

For eligible transfers of land or building on or after 23 July 2024, the post-Finance Act 2024 framework can require a comparison between 20% with indexation and 12.5% without indexation where the grandfathering provision applies.

The valuation certificate should make the comparison understandable. Your CA needs the relevant figures to determine the applicable capital-gain computation.

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CAPITAL GAIN COMPARISON

METHOD A INDEXATION

20%

Tax rate used in the applicable indexed-cost computation.

METHOD B NO INDEXATION

12.5%

Tax rate under the post-23 July 2024 framework.

✓

Compare the applicable computation before finalising the capital-gain position.

THE POST-FINANCE ACT 2024 FRAMEWORK

Why Did Method A vs Method B Become Important?

The tax treatment of long-term capital gains on land or buildings changed for transfers taking place from 23 July 2024. For eligible resident taxpayers with qualifying pre-23 July 2024 acquisitions, the law provides a comparison involving the new 12.5% rate and the earlier 20% indexed computation.

METHOD A

Indexed Cost

The computation uses the property's indexed cost of acquisition, where the applicable grandfathering provision permits this comparison.

Sale Consideration − Indexed Cost = LTCG

20% applicable indexed computation

OR Compare

METHOD B

No Indexation

The computation uses the unindexed cost of acquisition with the post-23 July 2024 long-term capital-gain rate.

Sale Consideration − Cost = LTCG

12.5% applicable no-indexation rate

IMPORTANT

The comparison is subject to the taxpayer's residential status, acquisition date, transfer date, asset type and applicable statutory provisions. Your CA should confirm the tax treatment applicable to the particular transaction.

THE VALUER'S ROLE

One Certificate. Two Computations.

For a qualifying Delhi property transaction, A2Z Valuers' Section 55(2)(b) certificate can present the relevant valuation figures in a format that allows the CA to work through the capital-gain computation.

Where the applicable rules require comparison, the certificate format can show the Method A indexed computation alongside the Method B no-indexation computation, making the difference visible rather than leaving the owner or CA to reconstruct the valuation figures.

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A2Z VALUERS VALUATION CERTIFICATE

SECTION 55(2)(b)

Fair Market Value 01.04.2001

Method A Indexed LTCG

Method B Unindexed LTCG

COMPARATIVE COMPUTATION CA-READY FIGURES

34AB

THE DELHI PROPERTY PATTERN

Why Long-Held Delhi Properties Need a Careful Comparison

A property acquired decades ago can have a very different indexed cost profile from a recently acquired property. This makes the underlying historical valuation evidence particularly important.

1970s–1990s Original Acquisition

Establish the relevant historical acquisition information and supporting documents.

01 APR 2001 Historical FMV

Where applicable, the Section 55(2)(b) valuation becomes a key input for the capital-gain calculation.

SALE Current Transaction

The applicable Method A / Method B comparison can then be considered with the CA.

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DELHI OWNER INSIGHT

A long holding period can make the indexation calculation materially different from the unindexed calculation.

This is why the correct historical valuation evidence, acquisition records and applicable tax framework should be examined before the owner and CA settle the final capital-gain computation.

FOR YOUR CHARTERED ACCOUNTANT

The Valuation Should Make the Tax Computation Easier.

The objective is not simply to produce a property value. The valuation documentation should give your CA the relevant historical FMV and supporting valuation basis needed for the capital-gain computation.

✓ Historical FMV

✓ Section 55(2)(b)

✓ Method A computation

✓ Method B computation

✓ Relevant property evidence

STEP 3 OF YOUR DELHI PROPERTY CAPITAL GAIN JOURNEY

Need to Understand Method A vs Method B?

Share your property's acquisition year, Delhi locality, expected sale value and transaction date. We can help identify the valuation information your CA may need.

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Deep-dive capital gain resource: governmentapprovedcapitalgainvaluers.ai