Enquiring about Capital Gain Tax on Sale of property

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Raveesh (Querist)
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13 September 2019 My Uncle who don't want to purchase another property after selling his share, want to know his actual Capital gain tax.

I am sharing all the necessary details :

Property Purchased in DELHI in 1952, by my Grandmother.
Sum paid was 19000.

After her passing away, through her will it was transferred on the name of My father and his elder brother (My uncle).

Now as per circle rate, its value is approximate 80 lakhs which will be divide equally.
So both brothers get 40 lakhs each.
Further my Uncle will Gift 15 lakhs (through cheque/DD) to my father, so the net amount he will possess from the sale will be 25 lakhs.

So
First he wants to know whether he will be Taxable on 40 lakhs or 25 lakhs
&
Second what exactly will be his Capital Gain tax ?

The important thing to note is what should be the Base year ie 1991 or 2001 & also the Base price in that year as the Circle rates in Delhi were brought in 2007.

So kindly advice me on this, it will be much helpful.

Karim N Shaikh

Karim N Shaikh (Expert)
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13 September 2019 In your question there is 6 aspect
1) Property inherited :
It is immaterial property gifted or Inherited. Any income arise from sale of Property would be considered as Capital gain

2) Year & Amount in which property Purchase :
In case of gift or inherited property, the purchase price & date of previous owner (grandmother).
Note: Date & price at the time or year of inheritance is irrelevant

3) Indexation :
Actual year of Purchase is 1952, but from Finance Act 2017 shifted to base year from 2001

4) Cost of Acquisition U/s 55 (2)
You have option to go for
1) Actual cost ( Rs. 19000)
2) Fair Market Value ( FMV) ( In 2001)
Note: You have to calculate Fair market Value from Valuation officer.
5) Capital Gain : Capital Gain Tax is difference between
Sales consideration Less Cost of Acquisition
Note: It is irrelevant whether your uncle Gift such amount to brother or someone else
6) Calculation of capital gain ( If we considered Actual cost of property as discussed in Point 4)

Sales consideration = Rs 80, 00,000

Cost of acquisition: 19000*280/100 = 53200

Capital Gain: 7946800
Share of your Uncle: 3973400
Tax @ rate : 20%
Note: Better to go with FAIR MARKET VALUE.
hope your query solved

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