Ltcg on a gifted property

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 November 2018 My father had purchased a flat in June 1981 for Rs. 1.17 L. He gifted this flat to my mother and registered this gift deed in Apr 2012 by paying a stamp duty of Rs. 1.96 L. He died in 2014 at the age of 80 years. My mother sold this flat in Apr 2018.

What is the cost of acquisition while calculating the LTCG for this flat ? Will this include indexation benefits ? Also under which section/subsection of Income tax act needs to be referred for this computation of LTCG for gifted property ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 November 2018 Cost of acquisition in case of gifted property will be what it costed to the person made the gift. In this case market value as on 1/04/2001 has to be considered with indexation as the purchase date is earlier than 2001.
Where an asset is acquired by gift or inheritance, the period of long term capital asset shall be reckoned from the date when the previous owner acquired such asset and the indexation shall be allowed accordingly from the year of acquisition by the previous owner.

Further section 49(1) also provides that in such cases the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.

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