Capital Gain

152 views 5 replies

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

A person is willing to sell his house, he bought a land and did a construction on 1979 for Rs 250000/-.

Now the sale consideration is Rs 1 crore 54 lakhs, and he don't have any plan to reinvest in any properties again, he plan to settle the amount to his 3 sons.

For sure Capital Gain tax will arise for Rs 25 Lakhs after the cost index workings.

is there any opportunities to avoid the capital Gain tax?

My assumptions

Before he does a sell, if he transfer the property to his sons and then the tax would be borne by the sons individually, if they want to reinvest it then there will be no capital gain will arise for them.

in this transfer to sons, should they need to do the registration or sale deed alone his enough to sale it for the Third party. Please clarify me in this regard.

Replies (5)

Ruchika Somani

Coaching and Practice in Tax Audit Law

4429 Points Joined June 2018

Transfer without consideration is not transfer. Ask him to sell and reinvest in each sons name to save capital gain tax

MOHAMMED IMRAN

1020 Points Joined December 2017

if he has no plan to reinvest (including u/s 54EC NHAI or RECL bond). then he is liable to pay LTCG u/s112 @ 20% on long term capital gain

Krishna

Manager - Genesis Tax Consultant

531 Points Joined March 2018

Thank You Madam & Sir

But I have one question.

Is the law is permitting to reinvest the sale amount on the sons name?

Because as an Individual he is selling and getting the amount on his name, if he reinvest the amount on Sons name whether the Capital Gain does not arise??

Please clarify me

Mehul Bhanushali

CA in Practice

174 Points Joined December 2012

No the law does not allow to reinvest in the sons name, not possible. Best option would be to gift the property to his 3 sons by paying stamp duty. And let his sons sale the property in their respective ratios