Why the 2001 value matters
A capital gain is the sale price less the cost of acquisition. For an asset held before 1 April 2001, the Income-tax Act, 2025 (section 90, as section 55(2)(b) of the 1961 Act did before it) lets you choose either the original cost or the asset's fair market value on 1 April 2001. A price paid in the 1970s, 80s or 90s is usually far below the 2001 value, so choosing the 2001 value reduces the taxable gain.
Inherited and gifted property is covered too: where the previous owner held it before 1 April 2001, its 2001 value can be your cost.
The stamp-duty cap for land and buildings
For land or a building, the 2001 fair market value cannot exceed the stamp-duty value of the property on 1 April 2001, wherever that value is available. A good report states the 2001 stamp-duty value it found — or that none was available for the property — so the cap is applied openly rather than discovered later by the assessing officer.
How a registered valuer fixes a 2001 value
- The property as it stood on 1 April 2001 — the land, and only the construction that existed then. Work done after 2001 is a separate cost of improvement for your chartered accountant.
- Evidence from the period: registered sale instances close to the date, the guideline rates then in force, and the age and condition of the building at that time.
- The building valued at its 2001 replacement cost less depreciation for its age then; the land from comparable sales of the period.
- The 2001 stamp-duty value checked and the cap applied where it binds.
- A report on the registered valuer's letterhead with the registration numbers — Category I under section 34AB of the Wealth-tax Act, and IBBI registered valuer for land and building — the method, and the evidence annexed.
Documents to send
- The purchase deed, or the papers that show how and when the property came to the family — for inherited property, the will, the succession certificate or the heirship (varsai) entry in the revenue record
- 7/12 or property card extracts, including the old entries
- The approved plan and building permission, if any; the year of construction and any later additions
- Property-tax or electricity bills from around 2001, if the family has kept them
- Photographs of the property as it is now
- The date of sale, if it is already fixed
What stays with your chartered accountant
The valuer fixes the 2001 value. The computation — whether indexation applies, the rate of tax, exemptions for reinvesting the gain — is your chartered accountant's work. Send them the report with the sale papers.
Why the evidence matters
The assessing officer can question a 2001 value and refer it to the department's valuation officer. A report that shows its period evidence and the stamp-duty check is far easier to defend than a bare figure.