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Capital Gain Tax

Bimal Thacker (Proprietor) (762 Points)

17 January 2011

Mr. A purchase house property in the year 1979 and transfer the same in the name of his elder son Mr X in the year 1991. Mr A has three son X, Y, & Z. Now the propery will be sold and sale proceed will be distributed equally to three son X Y Z.

How the tax will be effected and what tax planning should be done.

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5 Replies

Pankaj Arora (Learner) (3134 Points)
Replied 17 January 2011

Divide the sold property amount in among 3 and you can invest this amount in capital gain scheme.

rachit jain (chartered accountant ) (635 Points)
Replied 17 January 2011

the whole amount of capital gain will be chargable to tax unless the capital gain amount is invested in another house property ( u/s 54) within 2 years.

SUNIL GARG (CHARTERED ACCOUNTANT) (175 Points)
Replied 17 January 2011

Dear Bimal,

Tax will have to be paid on the capital gain by Mr X unless he invest amount according to section 54, 54EC etc.

If he does not claim exemption, then pay tax on capial gain and remaining sum he may distribute to other brothers (as gift) taking into the consideration of tax paid.

s (-) (216 Points)
Replied 18 January 2011

I hope you have calculated the Capital Gains by applying the Indexation to the Cost of Acquisition.

In my opinion,

If A has transfered the same to his son X at adequate consideration, then X will have to pay CG in 1991, and A has to pay CG now. Nothing to be paid by Y and Z.

If A has transferred the same by Gift, in that case, the CG to be borne by A and neither the sons X,Y,Z.

However, he can claim exemption u/s 54 or 54EC.