India, Nov. 8 -- Kochi-based Ramesh Nair inherited a 1-acre plot in Pune that his father had bought for Rs.25 lakh in 2015. Over the next three years, Ramesh built a house on it at a cost of Rs.50 lakh. In 2025, he sold the property for Rs.2 crore, with Rs.60 lakh attributed to land and Rs.1.4 crore to the house. Since the land's holding period exceeded 24 months (including his father's 10 years), it qualified as a long-term capital gain (LTCG). By applying indexation to both land and construction costs and claiming exemptions under Section 54, Ramesh was able to significantly reduce his tax liability. portion

When you inherit land, the cost of acquisition for tax purposes is the cost at which the previous owner (who owned the land befor...