Capital gain tax and gift tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2014 Hi,
My aunt purchased a shop in 1994 for Rs.2lac. She sold this in April 2014 for Rs.19lac. She is a house wife and not in a receipt of any other income so never filed any ITR.She is a senior citizen now. Please let me know the tax implications and any other way she can get exemption from tax provisions. She and her daughter in law purchased a house in feb 2014 which is financed by bank.can she use this sale proceeds in repaymnt of loan.first name in prperty is her daughter in law.Also can she transfer the amount to his son as gift into NRO joint account owned by both son and daughter in law.first name in account is her daughter in law. Both son and his wife are settled in Singapore since Jan2012 and have not come to India for more than 30days till date.please advice about all tax implications for my aunt and her son and daughter in law.

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2014 Please advice at tge earliest

Rupesh Jain

Rupesh Jain (Expert)
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24 April 2014 IF YOU SALE THE SHOP AND PURCHASES THE RESIDENTIAL HOUSE THEN ALL CAPITAL GAIN WILL EXMPT. IF SHE INVEST ALL SALE PROCEEDS TO BUY THE HOUSE ACCORING TO SECTION 54F OF INCOME TAX ACT.

AND HOUSE WILL BE IN NAME OF HER NOT WITH JOINT NAME.
IF IN JOINT NAME THEN SHE CA N NOT GET THE EXEMPTION U/S 54F.
IF SHE GIFT THE SALE PROCEEDS THEN SHE PAY CAPITAL GAIN TAX ON SALE OF THIS PROPERTY THEN SHE CAN GIVE GIFT TO ANY ONE.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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24 April 2014 1. your total taxable income should be around (after consuming exempted limit) Rs 8.8 lakhs

2. once you have purchased a house, you get exemption under section 54F. While there are some caselaws where it was ruled you need to invest the capital gains itself, there are equally strong cases in favor of claiming exemption despite buying the house using loaned funds. Please note buying in joint name in no case affects the exemption.

3. sending gift to any relative doesnt reduce tax liability.

Rupesh - as requested earlier, please check your facts..

Rupesh Jain

Rupesh Jain (Expert)
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24 April 2014 MR NIKHIL KAUSHIK

REGARDING YOUR 2.

IF YOUR FACT IS RIGHT WHEN WHAT IS REQUIRED TO CLAIM THE BENEFIT U/S 54F.

THEN ASSESSEE CAN CLAIM THE BENEFIT U./S 54. AS PER YOUR COMMENTS.

PLS CHECK SECTION OF 54 AND 54F .
IF BOTH ARE SAME THEN WHY THE INCOME TAX DEPTT. TAKE CONTINOUS INCLUED IN INCOME TAX ACT BOTH THE SECTIONS.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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24 April 2014 1. when did I say assessee can claim under 54?

2. didn't understand what you want to convey after "PLS Check Section 54 and 54F"

What I wanted to convey is simple,

1. it is wrong to say that you cannot invest in joint name. Forget joint name, even if you invest solely in your daughter-in-laws name, it would still be eligible for 54F deduction. Here the stress was on the investment in joint name and not on whether you need to invest the capital gains or the whole of the consideration! It is but obvious that under 54 you need to invest capital gains and under 54F the whole of the consideration..

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2014 Please advice about the tax implications for Rs.20lac transferred by mother to his son and then by son to his wife??

Querist : Anonymous

Querist : Anonymous (Querist)

24 April 2014 Thanks for your reply.however can you please advice whether exemption under section 54f will be allowed if property purchased and financed is in joint name of daughter in law and aunt???As its not yet clear.