Can Capital gains tax be paid by the gift reciever?

Tax queries 387 views 4 replies

Akshara s.n.

1 Points Posted on 16 November 2019

Hi,
My father(late)'s elder brother got his elder sister's(unmarried woman) immovable property after her demise a decade ago through inheritance. Now, he wants to sell the property and distribute the capital gains earned among his nephews and nieces(9 in all).
Now, as soon as he sells the property, he has to pay the long term capital gains tax. But, one of his niece(myself) wants to know invest the money which I would be getting in REC tax free bonds or to invest in a new property.
So, is it possible that he gives me my share alone without paying tax, so that I can invest the same as told above and I could avoid paying capital gain tax.
Please let me know your valuable inputs
Akshara.S.N

Replies (4)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211711 Points Posted on 16 November 2019

NO.

This way tax liability cannot be transferred. Only the seller has to comply the liability.

sabyasachi mukherjee

Profession Business

28207 Points Posted on 18 November 2019

Generally tax liability cannot be transferred but here if your father gets mutual consent of all other beneficiaries and same is duly attested in front of notary public ,then the amount can be invested in capital gains account scheme in notified securities to avail tax concession.

rama krishnan

12244 Points Posted on 18 November 2019

No... your uncle will be liable to pay capital gains tax... in order to avoid capital gains tax, the entire sale consideration or capital gain, as the case may be, invested in the name of your uncle in any bonds, and after the maturity of the same, you can get back your share

Kapadia Pravin

17264 Points Posted on 19 November 2019

@ Akshara
The way you proposed will not help beneficiary to get tax benefits.

The capital gains tax liability is of the seller only. Your uncle can invest upto maximum 50 lakhs in 54EC bonds REC. ( but that is not tax free)

The better way is -----
Before selling the property , your uncle should gift the property by gift deed in respective share of beneficiaries. Register gift deed if required.

Thereafter when property is sold , seller will be all beneficiaries and LTCG will be taxable respectively in individual return of beneficiaries.

In this way, all 9 beneficiaries will be able to take benefit under 54EC -- REC bonds to the extent of 50 lakhs by each beneficiary.

That is TOTAL of 4.5 crore ( Rs 50 lakhs x 9 nieces) deduction under REC bonds.