Capital Gains and FMV 2001

What this report establishes

One number: what your property was worth on 1 April 2001. That figure replaces the original purchase price as your cost of acquisition, which is why it matters so much when the property was bought decades ago for what now looks like nothing.

A flat bought in 1985 for eighty thousand rupees and sold today for a crore looks like a crore of gain. Establish that it was worth twelve lakh in 2001 and the taxable gain collapses. The rule applies to inherited property too, because you take the original owner's purchase date.

The date is everything

This is a retrospective valuation. We are not valuing the property today, we are valuing it as it stood on a specific day in 2001, using the notified rates in force then and registered transactions from that period in that locality. A report dated today with today's value does not answer the question, however well prepared.

What we need from you

• The purchase deed, or the deed of the person you inherited from.
• Any property tax receipt from around 2001, if one survives.
• Mutation or revenue records.
• The approximate age and construction of the building.

Missing the old deed is normal. Certified copies come from the sub registrar office, and the 2001 value rests on the notified rates and comparable transactions rather than on your own paperwork.

Who reads it

Your chartered accountant, to compute the gain. The assessing officer, if the return is picked up. And it underpins a lower deduction application, which is where the cash saving actually lands.

What NRIs should know about the rate

Long term gains on immovable property are charged at twelve and a half percent, and the indexation option available to residents is not available to non residents. Surcharge and cess sit on top, so the effective rate is higher than the headline figure.

The mistake that costs most

Selling first. Once the buyer has deducted tax on the full sale value and paid it over, you are into a refund claim that can run many months. Commission this while you are deciding to sell, not after the agreement is signed.

What you get

A signed report from a government approved valuer, based on a real inspection, with the workings shown so the person reading it can follow how the figure was reached. Our registration number is printed on it. If anyone questions it later, the evidence is already in the file.

• An inspection that actually happened. Our engineer stands at the property. Every photograph carries the date, the time and the exact position.
• Comparable evidence, named. Real sales from the relevant area and the relevant period, identified so anyone can check them.
• Method stated openly. Which approach we used and why, with the adjustments set out rather than buried.
• The right date. A valuation is always as at a date. Get the date wrong and the number is useless even if the work is perfect.
• Currency where you need it. Rupees for the Indian side, converted for your side, with the exchange rate and its source stated.

How long it takes

Normally 48 to 72 hours from the site visit, once we have the basic papers. If it is urgent, tell us and we will treat it that way. For anything tied to a sale, start before you sign the agreement rather than after, because some of the biggest savings are only available in advance.

What it costs

It depends on the property type, its size and how far our engineer has to travel. Message us with the basic details and you get a firm figure before any work starts. No surprises later, and five percent off your first report.

What if the papers are missing

Very common, and usually not a problem. A deed from 1974 may simply not exist in the family any more. Records at the sub registrar office, property tax records and the notified rates for the area can normally fill the gap. Tell us what you do have and we will tell you straight away whether it is workable.

Questions people ask

Does the 1 April 2001 rule apply to inherited property?

Yes. You take the purchase date and cost of the person you inherited from. If they bought before 1 April 2001, you may use the property's value on that date as your cost, which usually cuts the taxable gain sharply.

What tax rate do NRIs pay on long term gains?

Long term gains on immovable property are charged at twelve and a half percent for non residents, without the indexation option residents can use. Surcharge and cess are added on top, so the effective rate is higher.

Can I get this done after I have sold?

Yes, but you lose the biggest saving. Once the buyer has deducted tax on the full sale value, you are into a refund claim. Commission the valuation while you are deciding to sell.