Hi Mr. Dinesh, You have not mentioned the purchase price and year of purchase. I beleive you have sold the property in FY 2009-10. There is no question of notional gain. Income tax is never calculated on notional gain. Capital gain arises only when your selling price is more than the purchase price and after applying indexation ( ie if the purchase price is taken at the same level of the year of sale)and if the property is sold after holding the same for more than 3 years than long term capital gain would arise and if it is held for less than 3 years than short term capital arises. There are investment options available in case of long term capital gains like purchase of new house withing 1 year of the sale of the present property or if there is construction going on then it should be completed within 2 years. There is also an option of purchasing the property before 1 year of the sale. In your case, there is no tax on notional gain. Let me know your sale year and purchase price and purchase year so that exact amounts can be arrived. By CA Tejas Chokshi, FCA, M.com.
