Kaminiben, an NRI from Anand, Gujarat, ran into trouble with the income tax department after selling a house in AY 2018-19. She had originally purchased the property back in 2005 for Rs 1.94 lakh, and sold it for Rs 21.4 lakh. Tax notices followed but since she was living abroad at that time, she never got around to responding to the tax notices sent by the Income Tax Department.
Since Kaminiben sold this property in 2018-19, she was entitled to get inflation (indexation) benefits. Once applied, the indexed cost of acquisition came to Rs 4.52 lakh. She had also spent money on improving the house over the years, and the indexed cost of these improvements added up to Rs 8.87 lakh, backed by contractor's bills which she had kept as evidence. Running the numbers: Rs 21.4 lakh minus Rs 4.52 lakh minus Rs 8.87 lakh, left her with a long term capital gain of roughly Rs 8 lakh.
