Long-term capital gain computation requires deducting transfer expenses and applying indexed cost adjustments using cost inflation index.

Long term capital gain is calculated by taking the full value of consideration, subtracting expenditures incurred wholly and exclusively in connection with the transfer to obtain net sale consideration, and then deducting the indexed cost of acquisition and the indexed cost of improvement. Indexed costs are computed by multiplying the original cost by the Cost Inflation Index of the year of transfer divided by the Cost Inflation Index of the year of acquisition or improvement.

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