Capital Gains - Sale of my share by Release Deed - Inherited property

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This discussion concerns the capital gains tax implications of selling a share in an inherited property. The user inherited a 20% share of a flat via their father's will, with ownership formalised after their mother's passing. They are selling their share and seek guidance on calculating capital gains tax, potential exemptions through bond investments, and the correct base year for cost indexation, questioning if it should be the inheritance date rather than the original purchase date.

Ravi Darisi

Ravi Darisi (Querist)
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09 November 2022 Dear Sir / Madam,

My father purchased a flat in 1992 for Rs. 3,25,000/-, out of his own earnings - retirement money. Stamp Duty paid approx Rs. 17,000/-. And Registration Charges paid approx Rs. 4,500/-. Means Cost of Aquisition in 1992:- Rs. 3,46,500/-.

My father executed a Will, bequeathing all his tangibles to my mother; it also says, after her demise - the remnants to be shared equally amongst myself, my 3 sisters and my pre-deceased brother's wife, @ 20% each.

My father passed away on 15-06-2019 and my mother on 06-07-2020. Property Card containing all our (inheritors') names as co-owners was issued by the local authority on 11-04-2022. But I believe this is only a formality and the ownership vests with us with effect from 06-07-2020.

I am selling my 20% share of ownership rights in the flat to my brother's wife for Rs. 15,00,000/-. Please inform what is the approximate amount of Capital Gains, Tax payable thereon and also the approximate amount I have to invest in the specified Bonds for claiming full exemption from payment of tax.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 November 2022 Deduct indexed cost of 20% Market value as on 1st April 2001 from 15 lacs to arrive at capital gains.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 November 2022 Deduct indexed cost of 20% Market value as on 1st April 2001 from 15 lacs to arrive at capital gains.

Ravi Darisi

Ravi Darisi (Querist)
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09 November 2022 Sir,

I am really grateful for your very quick response. Can't the base year be 2020? I read an article on Cleartax that the base year in case of inherited property will be the year in which the inheritance was received and not 2001. Sending the link for the same. Requesting you to please examine the matter in this context and revert with your considered opinion. (Kindly see under the heading 'Points to Ponder'.)

https://cleartax.in/s/cost-inflation-index#indexation=

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 November 2022 It's the market value to considered on 1st April 2001.

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