Capital Gains of Property Share acquired through Release Deed

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This discussion clarifies capital gains tax implications when a property share is acquired through a Release Deed. It confirms that shares transferred via a Release Deed without consideration are treated as Long-Term Capital Gains (LTCG). The cost of acquisition is deemed to be the original cost, and indexation benefits are available from the original acquisition year for the entire property.

niki

niki (Querist)

15 March 2025 Hi All,

A property was acquired jointly by an assessee in FY 2000-01 along with her husband with each having 50% share. (Rs. 10 lacs each)
The husband passed away in the year 2020-21 without any will. Consequently, the assessee and her two sons inherited 1/3rd share of 50% of the property (husband’s share in property).
In FY 2024-25, the two sons signed a Release Deed in favour of the assessee (their mother) and transferred their share of 16.66% each to the assessee.
A month after the release deed was registered, the assessee sold off the property for 80 lacs.
My questions are
1. Will the capital gain for the share (of around 34%) acquired by the assessee through release deed be held as STCG or LTCG?
2. What will be taken as cost of acquisition for the share (of around 34%) acquired through release deed?
3. If LTCG, the will indexation benefit be available for the share (of around 34%) acquired through release deed?
4. What would be the base year for the indexation benefit for the share (of around 34%) acquired through release deed ?

Thanks
Niki

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

22 March 2025 Whether any consideration was received by sons from mother for release of their shares?

niki

niki (Querist)

09 April 2025 No consideration was received by the sons from their mother for release of their shares.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 April 2025 1. It will be LTCG..
2. 100% as 20 lakhs,,, No difference for 34% acquired otherwise.
3. Yes, indexation for whole total investment of 20 lakhs can be claimed.
4. Same 2000-01 for total.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

04 October 2025 Good luck...

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