The cost of acquisition of an asset is an important factor in undertaking the overall capital gains calculation because of the fact that this will play a role in determining the extent of the total capital gains and consequently the taxes to be paid.
By Arnav Pandya
The cost of acquisition of an asset is an important factor in undertaking the overall capital gains calculation because of the fact that this will play a role in determining the extent of the total capital gains and consequently the taxes to be paid. In most cases the cost incurred for the purpose of the asset is the actual figure to be considered in the working however there are some situations wherein there is choice for the individual to take the fair market value as on April 1, 1981 as the cost of acquisition.
Here is a look at the situation and the details related to it in terms of its actual implementation.
Ownership before the date
This kind of situation will also be applicable if the asset became the property of the individual through a gift or a will or a partition of the Hindu Undivided Family then there is a need to look at the situation carefully. In such a case if the previous owner acquired the property before the April 1, 1981 date then the individual would once again need to choose between having the actual cost or the fair value figure fixed for April 1, 1981 as the relevant figure for their workings.
The other asset where this is not available is the transfer of a capital asset being goodwill of a business, trade mark/brand name associated with a business, right to manufacture, produce or process any article or thing, right to carry on business, tenancy rights, route permits or loom hours. These represent clear areas where the use of this provision is prohibited and hence this has to be noted and the individual should ensure that they stay away from using the details when these are involved.
The author can be contacted at email@example.com
ADS BY GOOGLE
video of the day
Risk is a four letter word: Author Jerome Booth