Capital gains tax

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S. MOHAN (Querist)
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12 June 2013 One of our relative has sold a self owned property for around 37 lacs and he has not invested that amount in any other property. He has three daughters and wants to gift this amount to them.If he gifts this amount to his daughters can he avoid paying capital gains tax and if so what is the procedure or if If he decides to purchase a property from the capital gains amount , can he buy one property or two or more property. Please assist.

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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12 June 2013 you need to mention the date of sale.
However even if he gifts the amount,capital gains cannot be avoided.

to avoid tax he should purchase a house within two years from the date of sale or in case he decides to construct ,the time period is 3 years.

the amount(capital gain) not utilised for purachse or construction of another house shall be deposited under CAPITAL GAINS ACCOUNT SCHEME before the due date of filing return. Otherwise the capital gains become taxable.

You can invest the capital gains in more than one property

Anand Modi

Anand Modi (Expert)
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12 June 2013 No by gifting the money capital gain tax cannot be avoided.

But there are other deductions through which capital gain tax can be avoided.

However you have to tell that the property sold is a residential property or commercial property.

If it is a residential property then whether there any other residential property in the name of assesse.

S. MOHAN

S. MOHAN (Querist)
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12 June 2013 Thanks a lot for the quick reply. The property sold is a residential property and now he intends to purchase two plots, is this allowed or not or If the two plots are next to each other then can it be registered as one and bought.
If he purchases the plot now what is the time limit allowed for construction of the house. Please clarify.

Rupesh Jain

Rupesh Jain (Expert)
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12 June 2013 construction of house with three year from the tfr date.

CA Mayank Chopra

CA Mayank Chopra (Expert)
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14 June 2013 There has been a recent case law, where assessee has purchased two residential houses & same was not chargeable to tax. Both houses were next to each other.

CA Mayank Chopra

CA Mayank Chopra (Expert)
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14 June 2013 There has been a recent case law, where assessee has purchased two residential houses & same was not chargeable to tax. Both houses were next to each other.

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