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PROBLEM STATEMENT

APPLICATION OF LEASE FINANCING ON HOME BUY OR RENT DECISION FOR SHORT TERM PERIOD
Mr Badlikar is working in a reputed Indian company since last 16 years. He has been recently transferred to Chandigarh for a project work
which will be executed in 5 years. After completion of the project, he will be transferred to new project site in some other city.
Mr Badlikar is looking for a 2 bedroom house on rent in Chandigarh. He has zeroed in on a flat in a society in Sector-62 on a payment of Rs 14000
per month. Following other conditions are to be agreed by both the parties:
1. The house will be given on rent to Mr Badlikar for 5 years
2. There will be an increase in the rent every year. The payable amount of rent shall be equal to the HRA paid by the company.
3. The rent of every month is to be paid at the end of the month
Above conditions were acceptable to Mr Badlikar. However, he got an information that an identical size flat is available for sale in the same
society for Rs 40 Lakh. One of his close friends advised him to purchase the flat instead of taking it on rent. The purchased house can be sold at
the end of 5 years which Mr Badlikar will be transferred again to some other project. Though not much convinced, Mr Badlikar tried to compare
both the options.
Following data is avaialble with him:
a. Basic Purchase Price of the flat : 40,00,000
b. Registration Charges @ 5%
c. Other charges associated with Purchase of flat : 50,000
d. Cost of flat which can be financed by Housing loan from Bank - 80% of the basic purchase price
e. Funds avaialble for permanent withdrawal from the Provident fund (earning 8.5% interest) - 10,50,000
f. Home loan interest rate : 11% (assume no change in next 5 years)
g. Bank Processing charges for home loan apprvoal : Nil (as special scheme is going on)

The Bank officials have given the payment schedule (which is enclosed at Annexure - 1), indicating the monthly amount of EMI, principal and
interest payable on a loan of 32 lakh.

Following additional information is available
Annual savings in PF of Mr Badlikar= more than 1 lakh per annum
The interest in the PF is compounded annually
Highest Income tax rate = 30% + 3% education cess
Present Taxable Income in 30% slab = Approx 5 Lakh
Present Rate of Capital gains Tax = 20% + 3% education cess
Assumptions :
Assume Income Tax slabs and rates shall remain unchanged
Rate of appreciation of property in chandigarh 8% per annum
There is an annual upward Change of 6% in Cost inflation Index every year wrt previous year
Mr Badlikar want to know which option is better for him, taking the house on rent or purchase it.

Annexure-1

Annexure to Problem Statement
PAYMENT SCHEDULE FOR A LOAN OF 32 LAKH
Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

1

Apr-12

33030

29333

3697

3196303

2

May-12

33030

29299

3731

3192573

3

Jun-12

33030

29265

3765

3188808

4

Jul-12

33030

29231

3799

3185009

5

Aug-12

33030

29196

3834

3181175

6

Sep-12

33030

29161

3869

3177305

7

Oct-12

33030

29125

3905

3173401

8

Nov-12

33030

29090

3941

3169460

No

9

Dec-12

33030

29053

3977

3165483

10

Jan-13

33030

29017

4013

3161470

11

Feb-13

33030

28980

4050

3157420

Mar-13

33030

3153333

12

Total for FY12-13

28943

4087

349694

46667

13

Apr-13

33030

28906

4124

3149209

14

May-13

33030

28868

4162

3145047

15

Jun-13

33030

28830

4200

3140846

16

Jul-13

33030

28791

4239

3136607

17

Aug-13

33030

28752

4278

3132329

18

Sep-13

33030

28713

4317

3128012

19

Oct-13

33030

28673

4357

3123656

20

Nov-13

33030

28634

4397

3119259

21

Dec-13

33030

28593

4437

3114823

22

Jan-14

33030

28553

4477

3110345

23

Feb-14

33030

28512

4519

3105827

24

Mar-14

33030

28470

4560

3101267

344294

52067

Total for FY13-14

25

Apr-14

33030

28428

4602

3096665

26

May-14

33030

28386

4644

3092021

27

Jun-14

33030

28344

4687

3087334

28

Jul-14

33030

28301

4729

3082605

29

Aug-14

33030

28257

4773

3077832

30

Sep-14

33030

28213

4817

3073016

31

Oct-14

33030

28169

4861

3068155

32

Nov-14

33030

28125

4905

3063250

33

Dec-14

33030

28080

4950

3058299

34

Jan-15

33030

28034

4996

3053304

35

Feb-15

33030

27989

5041

3048262

36

Mar-15

33030

27942

5088

3043175

338268

58092

Total for FY14-15

37

Apr-15

33030

27896

5134

3038040

38

May-15

33030

27849

5181

3032859

Annexure-1
No

Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

39

Jun-15

33030

27801

5229

3027630

40

Jul-15

33030

27753

5277

3022353

41

Aug-15

33030

27705

5325

3017028

42

Sep-15

33030

27656

5374

3011654

43

Oct-15

33030

27607

5423

3006231

44

Nov-15

33030

27557

5473

3000758

45

Dec-15

33030

27507

5523

2995235

46

Jan-16

33030

27456

5574

2989662

47

Feb-16

33030

27405

5625

2984037

48

Mar-16

33030

27354

5676

2978360

331546

64814

Total for FY15-16

49

Apr-16

33030

27302

5728

2972632

50

May-16

33030

27249

5781

2966851

51

Jun-16

33030

27196

5834

2961017

52

Jul-16

33030

27143

5887

2955130

53

Aug-16

33030

27089

5941

2949188

54

Sep-16

33030

27034

5996

2943193

55

Oct-16

33030

26979

6051

2937142

56

Nov-16

33030

26924

6106

2931036

57

Dec-16

33030

26868

6162

2924874

58

Jan-17

33030

26811

6219

2918655

59

Feb-17

33030

26754

6276

2912379

60

Mar-17

33030

26697

6333

2906046

324046

72314

Total for FY16-17

61

Apr-17

33030

26639

6391

2899655

62

May-17

33030

26580

6450

2893205

63

Jun-17

33030

26521

6509

2886696

64

Jul-17

33030

26461

6569

2880127

65

Aug-17

33030

26401

6629

2873498

66

Sep-17

33030

26340

6690

2866809

67

Oct-17

33030

26279

6751

2860058

68

Nov-17

33030

26217

6813

2853245

69

Dec-17

33030

26155

6875

2846370

70

Jan-18

33030

26092

6938

2839431

71

Feb-18

33030

26028

7002

2832429

72

Mar-18

33030

25964

7066

2825363

73

Apr-18

33030

25899

7131

2818232

74

May-18

33030

25834

7196

2811036

75

Jun-18

33030

25768

7262

2803774

76

Jul-18

33030

25701

7329

2796445

77

Aug-18

33030

25634

7396

2789049

78

Sep-18

33030

25566

7464

2781586

79

Oct-18

33030

25498

7532

2774053

80

Nov-18

33030

25429

7601

2766452

81

Dec-18

33030

25359

7671

2758781

82

Jan-19

33030

25289

7741

2751040

83

Feb-19

33030

25218

7812

2743228

Annexure-1
No

Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

84

Mar-19

33030

25146

7884

2735344

85

Apr-19

33030

25074

7956

2727388

86

May-19

33030

25001

8029

2719359

87

Jun-19

33030

24927

8103

2711257

88

Jul-19

33030

24853

8177

2703080

89

Aug-19

33030

24778

8252

2694828

90

Sep-19

33030

24703

8327

2686500

91

Oct-19

33030

24626

8404

2678097

92

Nov-19

33030

24549

8481

2669616

93

Dec-19

33030

24471

8559

2661057

94

Jan-20

33030

24393

8637

2652420

95

Feb-20

33030

24314

8716

2643704

96

Mar-20

33030

24234

8796

2634908

97

Apr-20

33030

24153

8877

2626031

98

May-20

33030

24072

8958

2617073

99

Jun-20

33030

23990

9040

2608033

100

Jul-20

33030

23907

9123

2598910

101

Aug-20

33030

23823

9207

2589703

102

Sep-20

33030

23739

9291

2580412

103

Oct-20

33030

23654

9376

2571036

104

Nov-20

33030

23568

9462

2561574

105

Dec-20

33030

23481

9549

2552025

106

Jan-21

33030

23394

9636

2542388

107

Feb-21

33030

23305

9725

2532664

108

Mar-21

33030

23216

9814

2522850

109

Apr-21

33030

23126

9904

2512946

110

May-21

33030

23035

9995

2502951

111

Jun-21

33030

22944

10086

2492865

112

Jul-21

33030

22851

10179

2482686

113

Aug-21

33030

22758

10272

2472414

114

Sep-21

33030

22664

10366

2462048

115

Oct-21

33030

22569

10461

2451586

116

Nov-21

33030

22473

10557

2441029

117

Dec-21

33030

22376

10654

2430375

118

Jan-22

33030

22278

10752

2419624

119

Feb-22

33030

22180

10850

2408774

120

Mar-22

33030

22080

10950

2397824

121

Apr-22

33030

21980

11050

2386774

122

May-22

33030

21879

11151

2375623

123

Jun-22

33030

21777

11253

2364369

124

Jul-22

33030

21673

11357

2353013

125

Aug-22

33030

21569

11461

2341552

126

Sep-22

33030

21464

11566

2329986

127

Oct-22

33030

21358

11672

2318314

128

Nov-22

33030

21251

11779

2306535

129

Dec-22

33030

21143

11887

2294649

130

Jan-23

33030

21034

11996

2282653

131

Feb-23

33030

20924

12106

2270547

132

Mar-23

33030

20813

12217

2258331

Annexure-1
No

Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

133

Apr-23

33030

20701

12329

2246002

134

May-23

33030

20588

12442

2233560

135

Jun-23

33030

20474

12556

2221004

136

Jul-23

33030

20359

12671

2208334

137

Aug-23

33030

20243

12787

2195547

138

Sep-23

33030

20126

12904

2182642

139

Oct-23

33030

20008

13022

2169620

140

Nov-23

33030

19888

13142

2156478

141

Dec-23

33030

19768

13262

2143216

142

Jan-24

33030

19646

13384

2129832

143

Feb-24

33030

19523

13507

2116325

144

Mar-24

33030

19400

13630

2102695

145

Apr-24

33030

19275

13755

2088940

146

May-24

33030

19149

13881

2075058

147

Jun-24

33030

19021

14009

2061050

148

Jul-24

33030

18893

14137

2046913

149

Aug-24

33030

18763

14267

2032646

150

Sep-24

33030

18633

14397

2018248

151

Oct-24

33030

18501

14529

2003719

152

Nov-24

33030

18367

14663

1989056

153

Dec-24

33030

18233

14797

1974259

154

Jan-25

33030

18097

14933

1959327

155

Feb-25

33030

17961

15070

1944257

156

Mar-25

33030

17822

15208

1929050

157

Apr-25

33030

17683

15347

1913702

158

May-25

33030

17542

15488

1898215

159

Jun-25

33030

17400

15630

1882585

160

Jul-25

33030

17257

15773

1866812

161

Aug-25

33030

17112

15918

1850894

162

Sep-25

33030

16967

16064

1834831

163

Oct-25

33030

16819

16211

1818620

164

Nov-25

33030

16671

16359

1802261

165

Dec-25

33030

16521

16509

1785752

166

Jan-26

33030

16369

16661

1769091

167

Feb-26

33030

16217

16813

1752278

168

Mar-26

33030

16063

16967

1735310

169

Apr-26

33030

15907

17123

1718187

170

May-26

33030

15750

17280

1700907

171

Jun-26

33030

15592

17438

1683469

172

Jul-26

33030

15432

17598

1665870

173

Aug-26

33030

15270

17760

1648111

174

Sep-26

33030

15108

17922

1630189

175

Oct-26

33030

14943

18087

1612102

176

Nov-26

33030

14778

18252

1593849

177

Dec-26

33030

14610

18420

1575430

178

Jan-27

33030

14441

18589

1556841

179

Feb-27

33030

14271

18759

1538082

180

Mar-27

33030

14099

18931

1519151

181

Apr-27

33030

13926

19104

1500047

Annexure-1
No

Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

182

May-27

33030

13750

19280

1480767

183

Jun-27

33030

13574

19456

1461311

184

Jul-27

33030

13395

19635

1441676

185

Aug-27

33030

13215

19815

1421861

186

Sep-27

33030

13034

19996

1401865

187

Oct-27

33030

12850

20180

1381686

188

Nov-27

33030

12665

20365

1361321

189

Dec-27

33030

12479

20551

1340770

190

Jan-28

33030

12290

20740

1320030

191

Feb-28

33030

12100

20930

1299100

192

Mar-28

33030

11908

21122

1277979

193

Apr-28

33030

11715

21315

1256664

194

May-28

33030

11519

21511

1235153

195

Jun-28

33030

11322

21708

1213445

196

Jul-28

33030

11123

21907

1191538

197

Aug-28

33030

10922

22108

1169431

198

Sep-28

33030

10720

22310

1147120

199

Oct-28

33030

10515

22515

1124606

200

Nov-28

33030

10309

22721

1101885

201

Dec-28

33030

10101

22929

1078955

202

Jan-29

33030

9890

23140

1055816

203

Feb-29

33030

9678

23352

1032464

204

Mar-29

33030

9464

23566

1008898

205

Apr-29

33030

9248

23782

985116

206

May-29

33030

9030

24000

961116

207

Jun-29

33030

8810

24220

936897

208

Jul-29

33030

8588

24442

912455

209

Aug-29

33030

8364

24666

887789

210

Sep-29

33030

8138

24892

862897

211

Oct-29

33030

7910

25120

837777

212

Nov-29

33030

7680

25350

812427

213

Dec-29

33030

7447

25583

786844

214

Jan-30

33030

7213

25817

761026

215

Feb-30

33030

6976

26054

734972

216

Mar-30

33030

6737

26293

708680

217

Apr-30

33030

6496

26534

682146

218

May-30

33030

6253

26777

655369

219

Jun-30

33030

6008

27022

628346

220

Jul-30

33030

5760

27270

601076

221

Aug-30

33030

5510

27520

573556

222

Sep-30

33030

5258

27772

545784

223

Oct-30

33030

5003

28027

517757

224

Nov-30

33030

4746

28284

489473

225

Dec-30

33030

4487

28543

460929

226

Jan-31

33030

4225

28805

432125

227

Feb-31

33030

3961

29069

403056

228

Mar-31

33030

3695

29335

373720

229

Apr-31

33030

3426

29604

344116

230

May-31

33030

3154

29876

314241

Annexure-1
No

Month/year

Payment Due
(Rs.)

Interest (Rs.)

Principal (Rs.)

Balance (Rs.)

231

Jun-31

33030

2881

30149

284091

232

Jul-31

33030

2604

30426

253665

233

Aug-31

33030

2325

30705

222960

234

Sep-31

33030

2044

30986

191974

235

Oct-31

33030

1760

31270

160704

236

Nov-31

33030

1473

31557

129147

237

Dec-31

33030

1184

31846

97301

238

Jan-32

33030

892

32138

65163

239

Feb-32

33030

597

32433

32730

240

Mar-32

33030

300

32730

0

(Source : EMI calculator on www.loanwala.com)

I. PV of Cash Outflows under Rent alternative

Year

Rent after Taxes*
(Rs)

Discounting Rate for
PVF **

PVF **

Total PV (Rs)

1

116088

9.54

0.9523

110,551

2

124380

9.52

0.9108

113,285

3

132672

9.49

0.8721

115,703

4

140964

9.46

0.8361

117,860

5

149256

9.43

0.8023

119,748
577,147

* For details, Please refer Working Note 1
** For details, Please refer Working Note 2

II.
Year

PV of Cas Outflows under Buying Alternative

Loan repaymnet
for the year (Rs)

EMI (Rs)

A

Tax Advantage on
interest * (Rs)

B=A x 12

C

Loss of interest due
Net cash
to withdrawal of PF #
Outflows (Rs)
(Rs)
D

E=B-C+D

PVF *

F

Total PV (Rs)

G=E x F

1

33,030

396,360

46,350

89,256

439,266

0.9523

418,313

2

33,030

396,360

46,350

96,840

446,850

0.9108

406,991

3

33,030

396,360

46,350

105,072

455,082

0.8721

396,877

4

33,030

396,360

46,350

114,000

464,010

0.8361

387,959

5

33,030

396,360

46,350

123,684

473,694

0.8023

380,045

Less PV of Profit on Sale value of house at the end of 5 years (1920954*0.8023) @
Add : PV of Tax Liability due to Long Term Capital Gains @

1,541,181
107,964
556,968

Mr Badlikar's Annual saving through PF is more than one lakh. Therefore no tax rebate shall be applicable for the Principal amount
* For details, please refer Working Note 2
# For details, please refer Working Note 3
@ For details, please refer Working Note 4

III.

Recommendation

Since the PV of cash outflow in Borrow & Buying Option is less than Rent Option, therefore Mr Badlikar should buy the house
by taking a loan from the bank. The house may be disposed off at the end of his tenure in Chandigarh

Working Note 1

Mr Badlikar's taxable salary in 30% bracket is more than 5 lakh (given), and the amount of House
rent payable is much less than 5 Lakh (as shown below), therefore he will enjoy a tax rebate
in the highest income tax bracket for the full house rent paid

Month

House Rent Paid

Tax Saving (@30%+3% Edu Cess)

Rent After Taxes

1
2
3
4
5
6
7
8
9
10
11
12
Total for the year 1

14000
14000
14000
14000
14000
14000
14000
14000
14000
14000
14000
14000
168000

4326
4326
4326
4326
4326
4326
4326
4326
4326
4326
4326
4326
51912

9674
9674
9674
9674
9674
9674
9674
9674
9674
9674
9674
9674
116088

13
14
15
16
17
18
19
20
21
22

15000
15000
15000
15000
15000
15000
15000
15000
15000
15000

4635
4635
4635
4635
4635
4635
4635
4635
4635
4635

10365
10365
10365
10365
10365
10365
10365
10365
10365
10365

11 of 18

Working Note 1

Month
23
24
Total for the year 2

House Rent Paid
15000
15000
180000

Tax Saving (@30%+3% Edu Cess)
4635
4635
55620

Rent After Taxes
10365
10365
124380

25
26
27
28
29
30
31
32
33
34
35
36
Total for the year 3

16000
16000
16000
16000
16000
16000
16000
16000
16000
16000
16000
16000
192000

4944
4944
4944
4944
4944
4944
4944
4944
4944
4944
4944
4944
59328

11056
11056
11056
11056
11056
11056
11056
11056
11056
11056
11056
11056
132672

37
38
39
40
41
42
43
44
45
46
47
48
Total for the year 4

17000
17000
17000
17000
17000
17000
17000
17000
17000
17000
17000
17000
204000

5253
5253
5253
5253
5253
5253
5253
5253
5253
5253
5253
5253
63036

11747
11747
11747
11747
11747
11747
11747
11747
11747
11747
11747
11747
140964

12 of 18

Working Note 1

Month
49
50
51
52
53
54
55
56
57
58
59
60
Total for the year 5

House Rent Paid
18000
18000
18000
18000
18000
18000
18000
18000
18000
18000
18000
18000
216000

Tax Saving (@30%+3% Edu Cess)
5562
5562
5562
5562
5562
5562
5562
5562
5562
5562
5562
5562
66744

13 of 18

Rent After Taxes
12438
12438
12438
12438
12438
12438
12438
12438
12438
12438
12438
12438
149256

Working Note 2

The amount of interest payment varies from year to year, but the tax rebate is available on Rs. 1,50,000
or actual interest payment, whichever is less.
From the payment schedule, it is evident that the interest payment in first five years is always more than Rs 1,50,000.
Therefore, tax rebate on the interest is available only on Rs 1,50,000.
Since the ratio of tax saving to the interest paid shall vary each year, therefore, cost of debt after taxes will
also vary from year to year.
Extrapolated PVF at the cost of Debt
A
B
C
D
E
F
G

Interest paid during the year
Amount of Interst Eligible for Tax Rebate
Tax Advantage on Interest (B x 0.309)
Cost of Debt after taxes [11%(1-C/A)
PVF at 9% (monthly payment table)
PVF at 10% (monthly payment table)
Extrapolated PVF at the cost of Debt after
taxes

Year1
349,694
150,000
46,350
9.54
0.955
0.95

Year2
344,294
150,000
46,350
9.52
0.915
0.907

Year3
338,268
150,000
46,350
9.49
0.878
0.866

Year4
331,546
150,000
46,350
9.46
0.843
0.828

0.9523

0.9108

0.8721

0.8361

Year5
324,046
150,000
46,350
9.43
0.81
0.792

** Since Mr Badlikar's taxable salary in 30% bracket is more than 5 lakh, he will enjoy a tax rebate in the highest
income tax bracket for full Rs. 1,50,000
## The rent is to be paid at the end of each month, we will use the PV table for monthly payments
Extrapolating the PVF at the cost of debt
PVF at 9% (from monthly payment table)
PVF at 10% (from monthly payment table)
Difference in PVF per 1% change in discounting rate
Cost of Debt in Y1
Extrapolation is required for additional 0.54%

0.955
0.95
0.005
9.54
0.955 - (0.955-0.95) * 0.54

Remarks
As per payment Schedule
**
##

0.8023 Explained below

Working Note 3

Interest Schedule on amount withdrawn
from Provident fund to purchase the flat

Month
1
2
3
4
5
6
7
8
9
10
11
12

Amount (Rs)
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000
1,050,000

Interest Rate
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%

13
14
15
16
17
18
19
20
21
22
23
24

1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256
1,139,256

8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%

Interest (Rs)
7,438
7,438
7,438
7,438
7,438
7,438
7,438
7,438
7,438
7,438
7,438
7,438
89,256 Add this to Next Year Pricipal

15 of 18

8,070
8,070
8,070
8,070
8,070
8,070
8,070
8,070
8,070
8,070
8,070
8,070

Working Note 3

Month

Amount (Rs)

Interest Rate

Interest (Rs)
96,840 Add this to Next Year Pricipal

25
26
27
28
29
30
31
32
33
34
35
36

1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096
1,236,096

8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%

8,756
8,756
8,756
8,756
8,756
8,756
8,756
8,756
8,756
8,756
8,756
8,756
105,072 Add this to Next Year Pricipal

37
38
39
40
41
42
43
44
45
46
47
48

1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168
1,341,168

8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%

9,500
9,500
9,500
9,500
9,500
9,500
9,500
9,500
9,500
9,500
9,500
9,500
114,000 Add this to Next Year Pricipal

49

1,455,168

8.50%

16 of 18

10,307

Working Note 3

Month
Amount (Rs)
50
1,455,168
51
1,455,168
52
1,455,168
53
1,455,168
54
1,455,168
55
1,455,168
56
1,455,168
57
1,455,168
58
1,455,168
59
1,455,168
60
1,455,168

Interest Rate
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%
8.50%

Interest (Rs)
10,307
10,307
10,307
10,307
10,307
10,307
10,307
10,307
10,307
10,307
10,307
123,684

17 of 18

Working Note 4

Year 1
Year 2
Year 3
Year 4
Year 5

Value of the House at the beginning of the
Appreciated value at the end of
year
Appreciation during the year @8% ** the year
4000000
320000
4320000
4320000
346000
4666000
4666000
373000
5039000
5039000
403000
5442000
5442000
435000
5877000

** rounded off to nearest thousand
Principal Amount Paid in Year 1
Principal Amount Paid in Year 2
Principal Amount Paid in Year 3
Principal Amount Paid in Year 4
Principal Amount Paid in Year 5
Total Principal Amount Paid in 5 Years
A
B
C
D
E

Sale value of the House
Amount of Loan taken from the Bank
Balance amount of Principal amount to be
returned to Bank
Amount to be deposited back to Own
Sources
Profit (A-C-D)
Chane in Cost inflation Index every year
wrt previous year
Indexation Factor in 5th year
Indexed Cost of Acquisition
Long Term Capital Gains
Tax Liability on Capital gains

46667
52067
58092
64814
72314
293954
5877000
3200000
2906046
1050000
1920954

6%
1.34
5352902
524098 Sale Value - Indexed cost of acquisition
107964