How are capital gains on property calculated?

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—Name withheld on request As per the facts provided, it is understood that full payment towards purchase of the said commercial property was made and possession was also received in 1999. Only the registration of the property was completed in 2011. There is considerable debate on the date that should be considered as date of acquisition of a property, where date of registration is different than date of possession/completion of payment.

There are divergent judicial precedents, depending upon the facts of the case and the underlying documentation. The general prevalent view is that the date of acquisition should be the date on which an unfettered right in the property has been received by the purchaser. In the instant case, as it appears that both the payment and possession have been duly completed in 1999, the same may be considered as the year of acquisition of the purpose of calculation of capital gains.

However, considering the divergent views, litigation in such a case cannot be ruled out and would need a thorough evaluation of the underlying documents/ agreements/ terms. Considering the period of holding of the property is more than two years, any gain / loss arising from transfer of the same, shall be taxable as long-term capital gain or loss. Where date of acquisition of is considered as 1999, then either fair market value of the property as on 1 April 2001 or actual cost of acquisition, at your option, may be considered as cost of acquisition of the property and indexation should also be considered accordingly.