TaxTMI 
TaxTMI 
X booked a flat in year 1995 and paid the advance of Rs. 20,00,000/-. Registary deed made on 2001 of Rs. 40,45,000/-. property sold out in 2006. While calulating Capital Gain, Indexation on cost of acquisition should be done from 1995 or 2001?
Indexation on cost of acquisition
12 Feb 2010 
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Indexation on cost of acquisition should be based on date of possession or registration, not initial booking.
Indexation of cost of acquisition for capital gains should be calculated from the date when the buyer's right becomes an immovable asset-generally the date of possession and/or registration-rather than the initial booking date. Booking creates a preliminary right that merges into a fuller proprietary right on registration/possession, and the actual cost and applicable Cost Inflation Index relate to the date of possession when computing indexed cost. Practical exceptions involving accrued liability or transfers for exemption purposes do not displace the possession/registration rule for indexation. (AI Summary)
Indexation of cost of acquisition for capital gains should be calculated from the date when the buyer's right becomes an immovable asset-generally the date of possession and/or registration-rather than the initial booking date. Booking creates a preliminary right that merges into a fuller proprietary right on registration/possession, and the actual cost and applicable Cost Inflation Index relate to the date of possession when computing indexed cost. Practical exceptions involving accrued liability or transfers for exemption purposes do not displace the possession/registration rule for indexation. (AI Summary)