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Capital gain exemption on gifted property

Amit Ashok Mahamune (Manager) (24 Points)

25 May 2016

Property is gifted from father to son long back and now son selling the property... two questions 1) Can we claim exemptions under section 54 as well as 54 EC for the capital gain 2) Can the indexed cost of acquisition be used for cost incurred by father to calculate the capital gain

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midhun pm (article) (37 Points)
Replied 25 May 2016

Dear Amit,

For the purpose of calculating capital gains on gifted property the period of holding includes period of holding of the previous owner and cost of aquisition is of the previous owner.

You can claim exemption u/s 54 and 54 EC provided it is within the limit of 50 lakh for 54EC.

Indexation can be based on the year father started holding the property.

Thanks

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DURAI (M.Com MBA CA Final Student) (47 Points)
Replied 25 May 2016

Hi,

1. Transfer of property by way gift from your father is not taxable and subsequently if sell it is taxable in your hands after adjusting any other investment as allowed u/s 54 & 54EC. You are eligible for exemption U/s 54 & 54EC

2.Indexation is also available to the cost incurred by your father and subsequent cost born by you if holding period is more than 36months. You eligible for indexation of acquision cost.

This is merely a transfer by inheritance, taxability of LTCG/STCG transferred from your father to you.