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capital gain

02 September 2017

one of my relative aged 80 got her property share piece of vacant land through court last year july16 and now sold the property. the amount got from the sale of property she is willing to share to her 4 children and one portion to her own use purpose. do plz let me know whether capital gain is applicable. the property was bought during 1936 by her father out of which a part of vacant land rec'd by her in 2016 n sold now

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9 Replies

CA Ankush Dewani (2 Points)
Replied 02 September 2017

Yes. Capital gain will be applicable in her hands. She can then gift the amount to her children.

Ashwin Kumar (1229 Points)
Replied 02 September 2017

capital gain is applicable......

Ajay Kumar (14 Points)
Replied 02 September 2017

thank you for the information n suggestions. further I would like to ask one more question... what is the index to be taken to calculate the capital gain as the property is bought way back 1936 n no price index is available..plz do reply thank you once again

Ajay Kumar (14 Points)
Replied 02 September 2017

Ashwin Kumar (1229 Points)
Replied 03 September 2017

In that case since property bought in 1936 you have consider the index as on 2001 if I am correct and take the value.Before it was 1981. last year they bought a amendment regarding indexed cost of acquisition. To change from 1981 to 2001.so, you will have to calculate the value of the property as per the index in the year 2001

Ayush Singhvi (4 Points)
Replied 03 September 2017

Definitely capital gains tax is applicable to the relative. The cost of acquisition to be considered will be the fair value of the property on 01/04/1981 as adjusted by the cost inflation index, i.e., multiply by value in 1981 multiplied by 11.25 = today's adjusted cost * share of relative = cost to your relative.
In case of amount transferred to the children, the entire sum will not be subject to tax as it is gift received by relative or by way of will/inheritance.

Ashwin Kumar (1229 Points)
Replied 03 September 2017

Sorry I couldn't get u clearly

Shrutika Gupta (2 Points)
Replied 03 September 2017

Yeah ,new cost inflation index is applicable (by taking the index of 2001)

Ashwin Kumar (1229 Points)
Replied 03 September 2017

The sum u transfer will be subjected to tax since you did not claim any exemption under sec 54f and 54ec or any other available.... Though the money is transferred to ur children the money is still taxable in ur hands... And the interest earned if any thereon will also be taxable in ur hands as a deemed owner