Capital gains on sale of agricultural land
This query is : Resolved
27 February 2016
My client is an individual. He is owner of agricultural land. The said land purchase deed contains only his name as owner. therefore, his name was reflected in 7/12 extract. Later he got his spouse and daughter's name added in 7/12 extract.
My query is that at the time of sale of the said land, capital gains will be attracted to whom ? Only the individual as only his name is there in title deed. Or capital gains will be attracted to all three i.e. individual, spouse and daughter as all three names appear in 7/12 extract ?
My query is that at the time of sale of the said land, capital gains will be attracted to whom ? Only the individual as only his name is there in title deed. Or capital gains will be attracted to all three i.e. individual, spouse and daughter as all three names appear in 7/12 extract ?
27 February 2016
The situation is like the daughter is going to get share in sale proceeds of the said agricultural land by inheritance. But since her name is appearing in 7/12 extract, will she be liable to capital gains on transfer of said agricultural land ?
03 June 2016
Please reply. My client needs correct guidance at earliest.
Thank you.
Thank you.
18 July 2024
In India, the ownership and taxation of capital gains on agricultural land depend on several factors including the title deed, 7/12 extract, and other legal considerations. Here’s how the situation typically unfolds based on the details provided:
### Ownership and Capital Gains Tax Liability
1. **Title Deed vs. 7/12 Extract:**
- The title deed reflects legal ownership of the property. If the title deed only includes the individual’s name (the client), then legally, he is the sole owner of the agricultural land as per the title deed.
2. **Impact of 7/12 Extract:**
- The 7/12 extract (or land records) maintained by the revenue department typically records the names of individuals who have a stake in the agricultural land. If the client has subsequently got his spouse and daughter's names added to the 7/12 extract, it indicates their interest or share in the land as per revenue records.
3. **Capital Gains Tax Liability:**
- **Individual (Client):** Since the title deed only reflects the client's name, he will be primarily liable for capital gains tax on the sale of the agricultural land. The capital gains tax will be computed based on the difference between the sale consideration and the indexed cost of acquisition.
- **Spouse and Daughter:** While their names are included in the 7/12 extract, which indicates their share in the land as per revenue records, their ownership rights and consequent tax liabilities are generally determined by legal ownership as reflected in the title deed.
- **Inheritance Considerations:** If the daughter is set to inherit a share of the proceeds from the sale of the land, her inheritance rights would come into play after the sale. Capital gains tax on the sale itself, however, is primarily the responsibility of the owner as per the title deed.
### Conclusion
- **Primary Tax Liability:** The individual client (owner as per the title deed) will be liable for capital gains tax on the sale of the agricultural land.
- **Inclusion in 7/12 Extract:** While the spouse and daughter are listed in the 7/12 extract, their tax liability for capital gains on the sale of the land would generally not arise unless their names are also on the title deed.
- **Inheritance:** Any subsequent inheritance rights or shares in the sale proceeds due to the daughter would be considered separately and may have implications for her tax obligations in the future, particularly related to inheritance laws and taxes.
Given the complexities involved, especially regarding inheritance and local land laws, it is advisable for your client to consult with a qualified tax advisor or legal expert who can provide tailored advice based on the specific circumstances and local regulations applicable to the sale of agricultural land.
### Ownership and Capital Gains Tax Liability
1. **Title Deed vs. 7/12 Extract:**
- The title deed reflects legal ownership of the property. If the title deed only includes the individual’s name (the client), then legally, he is the sole owner of the agricultural land as per the title deed.
2. **Impact of 7/12 Extract:**
- The 7/12 extract (or land records) maintained by the revenue department typically records the names of individuals who have a stake in the agricultural land. If the client has subsequently got his spouse and daughter's names added to the 7/12 extract, it indicates their interest or share in the land as per revenue records.
3. **Capital Gains Tax Liability:**
- **Individual (Client):** Since the title deed only reflects the client's name, he will be primarily liable for capital gains tax on the sale of the agricultural land. The capital gains tax will be computed based on the difference between the sale consideration and the indexed cost of acquisition.
- **Spouse and Daughter:** While their names are included in the 7/12 extract, which indicates their share in the land as per revenue records, their ownership rights and consequent tax liabilities are generally determined by legal ownership as reflected in the title deed.
- **Inheritance Considerations:** If the daughter is set to inherit a share of the proceeds from the sale of the land, her inheritance rights would come into play after the sale. Capital gains tax on the sale itself, however, is primarily the responsibility of the owner as per the title deed.
### Conclusion
- **Primary Tax Liability:** The individual client (owner as per the title deed) will be liable for capital gains tax on the sale of the agricultural land.
- **Inclusion in 7/12 Extract:** While the spouse and daughter are listed in the 7/12 extract, their tax liability for capital gains on the sale of the land would generally not arise unless their names are also on the title deed.
- **Inheritance:** Any subsequent inheritance rights or shares in the sale proceeds due to the daughter would be considered separately and may have implications for her tax obligations in the future, particularly related to inheritance laws and taxes.
Given the complexities involved, especially regarding inheritance and local land laws, it is advisable for your client to consult with a qualified tax advisor or legal expert who can provide tailored advice based on the specific circumstances and local regulations applicable to the sale of agricultural land.
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