Do u know property is declared for tax purposes at its purchase value, also known as book value?
500yds DHA plot bought in 1990 for (say) 3 lacs is declared at 3 lacs, not its current market value which can be 3crores!
Rationale: Will you pay tax every year for property value appreciation? What if your property depreciates? Will you ask for tax credit? What scams will this fluctuations and adjustments may cause? What about fluctuations in stocks?
Hence, capital gains tax is only levied at the time of sale of the asset, when sale price is subtracted from purchase price. The difference becomes capital gains, and is taxed as Capital Gain Tax.
Property or land will be declared as per purchase value as well as current value in Election Commission assets declaration both, but only purchase value (at the time of purchase) will be provided in Election nomination papers. Also there is only property tax no wealth tax as of now, but we need to submit wealth statement with tax returns, property tax is provincial tax not federal.
As per IFRS and GAAP all properties supposed to be disclosed at cost or market value which ever is lower. Any depreciation needs to adjusted in balance sheet, but not enhance in the market value. So it should be at cost.