TAX ON INHERITED LAND & SEC54 EC INVST. PLS HLP
This query is : Resolved
12 December 2010
hello Experts ! iwant to ask you few quetion regading Capital Gain.
Q1)If i want sold Agriculturalland in Maharastra (Jalgoan.dist)from where can i get the cost of land as on 1.4.81 i.e from which relevant authority can i get valuation Documents for computing Indexed cost of acquistion?
Q2)If land is sold for Rs13 lacs n its Stamp Value in year of sale is Rs50 lacs then even after Investing Rs13 lacs in Sec 54EC-NHAI BONDS how can i save tax on balance amt?Is there any other way to save tax?
Q3)Whether this amt has to be invetsed in my Grandmothers(assesse) name only or can be invested jointly in my fathers name in order to get Deduction u/s54EC?
Q4)Whether Int rec from Nhai Bonds is Taxable? If yes in whose hands if Jointly invested?
Q5)The Buyer has made Part Payment as follows:
FY AY Rs(Chq)
1.08-09 09-10 70,000 & 50,000(cash)
2.09-10 10-11 3,00,000 -
3.10-11 11-12 2,30,000 -
In which AY DO MY GRANNY HAVE TO FILE ITR & PAY CAPITAL GAIN TAX?(STILL THE PROPERTY IS NOT YET TRANFERED IN THE NAME OF BUYER)
Q6) In case of the deal is forefieted .i.e if no transfer takes place then whether the above amt recieved is taxable under normal slab rate?
Q1)If i want sold Agriculturalland in Maharastra (Jalgoan.dist)from where can i get the cost of land as on 1.4.81 i.e from which relevant authority can i get valuation Documents for computing Indexed cost of acquistion?
Q2)If land is sold for Rs13 lacs n its Stamp Value in year of sale is Rs50 lacs then even after Investing Rs13 lacs in Sec 54EC-NHAI BONDS how can i save tax on balance amt?Is there any other way to save tax?
Q3)Whether this amt has to be invetsed in my Grandmothers(assesse) name only or can be invested jointly in my fathers name in order to get Deduction u/s54EC?
Q4)Whether Int rec from Nhai Bonds is Taxable? If yes in whose hands if Jointly invested?
Q5)The Buyer has made Part Payment as follows:
FY AY Rs(Chq)
1.08-09 09-10 70,000 & 50,000(cash)
2.09-10 10-11 3,00,000 -
3.10-11 11-12 2,30,000 -
In which AY DO MY GRANNY HAVE TO FILE ITR & PAY CAPITAL GAIN TAX?(STILL THE PROPERTY IS NOT YET TRANFERED IN THE NAME OF BUYER)
Q6) In case of the deal is forefieted .i.e if no transfer takes place then whether the above amt recieved is taxable under normal slab rate?
12 December 2010
Q1. First check whether the agricultural land is qualified as rural agriculutural land. if it is so, then there will be no tax.
Reply to Q2. The sale consideration will be considered as Rs.50 Lakh and investment u/s 54EC will have to be made for Rs.50 Lakhs.
Q3. The amount has to be invested in the name of the person who are the current owner of the property, i.e. who are going to execute the sale deed and who are going to receive the sales consideration.
Q4. The interest is taxable under the head other sources in the hands of the person in whose name the investments is made subject to the provision of clubbing of income.
Q5. Part payments received will be taxable in the financial year in which the assets will be transferred.
Q6. In case the advance money is forfeited, the amount received will not be taxable at all. But the same shall be reduced from the cost of the asset at the time subsequent sale of the asset takes place.
Reply to Q2. The sale consideration will be considered as Rs.50 Lakh and investment u/s 54EC will have to be made for Rs.50 Lakhs.
Q3. The amount has to be invested in the name of the person who are the current owner of the property, i.e. who are going to execute the sale deed and who are going to receive the sales consideration.
Q4. The interest is taxable under the head other sources in the hands of the person in whose name the investments is made subject to the provision of clubbing of income.
Q5. Part payments received will be taxable in the financial year in which the assets will be transferred.
Q6. In case the advance money is forfeited, the amount received will not be taxable at all. But the same shall be reduced from the cost of the asset at the time subsequent sale of the asset takes place.
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12 December 2010
Thank You Sir for Timely answering my Querries ! On ur Reply I would like to ask you few more question.
Q1 to Your Reply 1)
I have Checked That u/s 2(14)Clause(3)-definition of Capital asset.In our case it within the jurisdiction of Local Municipal Board &as per the latest Census report of 2001 there are more than 10,000 persons alive.Hence it is not a qualified for rural agriclutral land and therefore it is a capital Asset.
My question is from which Authority can i get the Valuation of the said land as on 1.4.81?
I met Talati,URBAN VALUATION DEPARTMENT,Taluka Daharangoan,Dist Dharangoan and he repied that we don not have any records of The year 81-81 since that dept was set up only in 89-90 onwards & he therefore doesnt have record.
Q2)to your reply2)
Sir if Rs. 50,00,000 is taken as full value of consideration then even after investing Rs. 13,00,000 (the amt which we are recieving as sale value) so in this case Net LTCG COMES to 37,00,000/
But we do not have this much amt as we are selling @ low rate this due to some family reasons and ill heath of my Granny and there are no other buyers for it. So how can i save Tax on Rs. 37,00,00,000?
Q3) If in the year of Tranfer if we do not file ITR then is there any chance of IT-Dept coming to know abt this transaction which can under scrutiny
u/s143(3)?
Q1 to Your Reply 1)
I have Checked That u/s 2(14)Clause(3)-definition of Capital asset.In our case it within the jurisdiction of Local Municipal Board &as per the latest Census report of 2001 there are more than 10,000 persons alive.Hence it is not a qualified for rural agriclutral land and therefore it is a capital Asset.
My question is from which Authority can i get the Valuation of the said land as on 1.4.81?
I met Talati,URBAN VALUATION DEPARTMENT,Taluka Daharangoan,Dist Dharangoan and he repied that we don not have any records of The year 81-81 since that dept was set up only in 89-90 onwards & he therefore doesnt have record.
Q2)to your reply2)
Sir if Rs. 50,00,000 is taken as full value of consideration then even after investing Rs. 13,00,000 (the amt which we are recieving as sale value) so in this case Net LTCG COMES to 37,00,000/
But we do not have this much amt as we are selling @ low rate this due to some family reasons and ill heath of my Granny and there are no other buyers for it. So how can i save Tax on Rs. 37,00,00,000?
Q3) If in the year of Tranfer if we do not file ITR then is there any chance of IT-Dept coming to know abt this transaction which can under scrutiny
u/s143(3)?
26 July 2025
Here’s a detailed answer to your multiple queries related to **capital gains tax on inherited agricultural land** in Maharashtra, investment under **Section 54EC**, and related issues:
---
### Q1) Cost of Land as on 01.04.1981 for Indexed Cost
* For capital gains computation, **cost of acquisition** as on 1.4.1981 is relevant if the asset is held before that date.
* Since local municipal or valuation departments do not maintain records that old, you may consider:
* **Government Gazette Notifications** issued at that time (for stamp duty rates).
* **Revenue Department / Collector Office** or **Land Records Office** for any historical valuation or record.
* If no documents exist, then **cost of acquisition can be taken as actual purchase price or fair market value as best as can be evidenced**.
* Alternatively, you can file a request under RTI with the relevant department to see if archival records exist.
* Sometimes courts accept **valuation reports from independent valuers** as evidence of cost in absence of official records.
---
### Q2) Sale Value Rs.13 Lacs, Stamp Duty Value Rs. 50 Lacs, and Section 54EC Investment
* For capital gains, **the sale consideration is the higher of actual sale price or stamp duty value (circle rate)** as per Section 50C of Income Tax Act.
* Here, since stamp duty value (Rs.50 Lacs) > sale price (Rs.13 Lacs), **capital gains will be computed on Rs.50 Lacs**.
* **Section 54EC** exemption is allowed only on the amount invested in specified bonds (NHAI, REC), max Rs.50 Lakhs in 1 financial year.
* You invested only Rs.13 Lacs in 54EC bonds, so exemption will be Rs.13 Lacs only.
* The balance LTCG (Rs.37 Lacs approx) will be taxable unless you explore other avenues such as:
* Claiming hardship or genuine reasons with documentary proof (rarely accepted).
* Gift or partition deeds to transfer part of capital gains.
* Invest in residential house property under **Section 54** (if applicable).
* Set-off losses from other sources if available.
---
### Q3) Can the 54EC investment be made jointly in grandmother & father’s name?
* **Section 54EC deduction is allowed only if investment is made by the assessee who has capital gains**.
* If the land is inherited and registered in grandmother’s name, only she can claim deduction.
* Joint investments dilute the claim and might not be accepted for exemption.
* So, it’s safer to invest in grandmother’s name only.
---
### Q4) Interest Income on NHAI Bonds - Taxability
* Interest on NHAI bonds is **fully taxable as income from other sources** in the hands of the investor(s).
* If jointly held, interest is taxable proportionately in the hands of respective holders as per their share.
* Interest income is not exempt under Section 54EC.
---
### Q5) Capital Gains Tax Payment & ITR Filing for Instalment Sale
* Sale consideration received in instalments across AYs 2009-10 to 2011-12.
* Capital gains are taxable in the **AY in which the property is transferred or ownership is passed** (even if deed not registered but possession and agreement exist).
* If legal ownership is not yet transferred, then income is recognized on **the date of agreement or possession** depending on facts.
* Usually, the seller (your grandmother) should file ITR and pay capital gains tax for the AY immediately following the year in which sale is complete.
* In instalment sale, capital gain is taxable on full consideration received or due in that year, but registration is also important.
---
### Q6) If the deal is forfeited (no transfer happens), is the amount taxable?
* If deal fails and property is not transferred, advance or part payments received are **taxable as ‘Income from Other Sources’ or as per agreement**.
* Such amounts are not capital gains since no capital asset was transferred.
* Tax will be charged at normal slab rates for the assessee.
---
### Additional Comments:
* **Section 2(14)(3)** says agricultural land within certain urban limits is a capital asset, so capital gains apply here as you rightly pointed out.
* IT Dept can detect undeclared capital gains through scrutiny (section 143(3)) if they receive info on the transaction (stamp duty records, property registry).
* Not filing ITR in year of transfer is risky if transaction is large and visible in public records.
* It’s advisable to file ITR honestly with full disclosure and claim appropriate exemptions.
---
If you want, I can help you draft a plan for filing returns or explore any other tax-saving options on this. Let me know!
---
### Q1) Cost of Land as on 01.04.1981 for Indexed Cost
* For capital gains computation, **cost of acquisition** as on 1.4.1981 is relevant if the asset is held before that date.
* Since local municipal or valuation departments do not maintain records that old, you may consider:
* **Government Gazette Notifications** issued at that time (for stamp duty rates).
* **Revenue Department / Collector Office** or **Land Records Office** for any historical valuation or record.
* If no documents exist, then **cost of acquisition can be taken as actual purchase price or fair market value as best as can be evidenced**.
* Alternatively, you can file a request under RTI with the relevant department to see if archival records exist.
* Sometimes courts accept **valuation reports from independent valuers** as evidence of cost in absence of official records.
---
### Q2) Sale Value Rs.13 Lacs, Stamp Duty Value Rs. 50 Lacs, and Section 54EC Investment
* For capital gains, **the sale consideration is the higher of actual sale price or stamp duty value (circle rate)** as per Section 50C of Income Tax Act.
* Here, since stamp duty value (Rs.50 Lacs) > sale price (Rs.13 Lacs), **capital gains will be computed on Rs.50 Lacs**.
* **Section 54EC** exemption is allowed only on the amount invested in specified bonds (NHAI, REC), max Rs.50 Lakhs in 1 financial year.
* You invested only Rs.13 Lacs in 54EC bonds, so exemption will be Rs.13 Lacs only.
* The balance LTCG (Rs.37 Lacs approx) will be taxable unless you explore other avenues such as:
* Claiming hardship or genuine reasons with documentary proof (rarely accepted).
* Gift or partition deeds to transfer part of capital gains.
* Invest in residential house property under **Section 54** (if applicable).
* Set-off losses from other sources if available.
---
### Q3) Can the 54EC investment be made jointly in grandmother & father’s name?
* **Section 54EC deduction is allowed only if investment is made by the assessee who has capital gains**.
* If the land is inherited and registered in grandmother’s name, only she can claim deduction.
* Joint investments dilute the claim and might not be accepted for exemption.
* So, it’s safer to invest in grandmother’s name only.
---
### Q4) Interest Income on NHAI Bonds - Taxability
* Interest on NHAI bonds is **fully taxable as income from other sources** in the hands of the investor(s).
* If jointly held, interest is taxable proportionately in the hands of respective holders as per their share.
* Interest income is not exempt under Section 54EC.
---
### Q5) Capital Gains Tax Payment & ITR Filing for Instalment Sale
* Sale consideration received in instalments across AYs 2009-10 to 2011-12.
* Capital gains are taxable in the **AY in which the property is transferred or ownership is passed** (even if deed not registered but possession and agreement exist).
* If legal ownership is not yet transferred, then income is recognized on **the date of agreement or possession** depending on facts.
* Usually, the seller (your grandmother) should file ITR and pay capital gains tax for the AY immediately following the year in which sale is complete.
* In instalment sale, capital gain is taxable on full consideration received or due in that year, but registration is also important.
---
### Q6) If the deal is forfeited (no transfer happens), is the amount taxable?
* If deal fails and property is not transferred, advance or part payments received are **taxable as ‘Income from Other Sources’ or as per agreement**.
* Such amounts are not capital gains since no capital asset was transferred.
* Tax will be charged at normal slab rates for the assessee.
---
### Additional Comments:
* **Section 2(14)(3)** says agricultural land within certain urban limits is a capital asset, so capital gains apply here as you rightly pointed out.
* IT Dept can detect undeclared capital gains through scrutiny (section 143(3)) if they receive info on the transaction (stamp duty records, property registry).
* Not filing ITR in year of transfer is risky if transaction is large and visible in public records.
* It’s advisable to file ITR honestly with full disclosure and claim appropriate exemptions.
---
If you want, I can help you draft a plan for filing returns or explore any other tax-saving options on this. Let me know!
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