Capital gain tax

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harshay suryavanshi (Querist)
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15 August 2015 Dear experts,

We are having a property which belongs to our grand parents, post there demise the we are using the property without having changed the ownership documents, the property tax for last 10 years is coming in the name of my mother, who is currently taking care of property (we lost our father in 1997). Now mother is keen in selling out that inherited property and distribute the amount among us - brothers & sister all married.

1 What are the tax implication in such case ?

2 The index cost of the property could not be assertained as the same came to grandfather in division of property / settlement prior to 1968.

3 Should we include our name in sale deed as one of the party to sale, or only mother should receive the complete consideration and later distribute as gift. What should be the best way out ?

CA ALOK KUMAR

CA ALOK KUMAR (Expert)
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16 August 2015 Query 1. If sale deed will be executed by your mother, capital gain tax shall be leviable in her hands. For claiming exemption under sec 54, she has to invest capital gain amount, for purchase or construction of new house property. Means if she distributes its sale consideration among her children, no benefit of tax available.
Query 2- First you have to find out its market value as on 01/04/1981 and accordingly indexation rate will apply. CII for 1981 is Rs.100
Query3- If your mother receives entire sale consideration and latter distributing as gift among here children, she shall not eligible for exemption U/s 54. So before selling that property, you all should get your names added in records...

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