Capital gain tax on release deed b/w mother & Daughter holding 50% share each

Without consideration:

No tax implications now as the parties are mother and daughter. But, holding period and cost of acquisition of mother's share will be added to daughter's share at the time of selling in future. It is as if daughter bought the entire flat in Feb 2022.

With consideration:

Short term Capital gains on FMV - Cost = 40L - 18L = 22 lacs

Thanks for Quick response Venkatesh Chamarthi.

please help with below further queries as well

Without consideration:

1. During IT returns filing, do Mother has to mention anything? if so please through some light what to mention.

With consideration: Short term Capital gains on FMV - Cost = 40L - 18L = 22 lacs

1. If Daughter sells property for 90 Lacs, what will be the cost for CAPITAL GAIN? please see if below understanding is correct.

• 45L - 18L = 27 lacs (Daughter original 50 % share)
• 45L - 40L = 5 lacs (50% Share got from Mother via Release Deed)
• TOTAL CAPITAL GAIN = 27 lacs + 5 lacs

If it is with consideration, we have to consider how much money you paid your mother for acquiring her share.

If you paid 10L to your mother, your mother is paying tax on 22Lakhs, but you are escaping from gift tax which is 40L-10L = 30Lakhs because of mother and daughter relationship. Because you have not paid gift tax, your cost of acquisition becomes 10Lakhs, not 40lakhs.

If daughter sells the property for 90lakhs

45L-18L = 27L (daughter share)

45L-10L = 35L (mother share)

1. Without consideration:

Present tax liability is zero

Future tax liability on:

90L-36L = 54L

2. With consideration 10L:

Mother's tax liability on 40L-18L = 22L

Daughter's tax liability on 40L-10L = 30L (exempt)

Future tax liability:

Mother: zero

Daughter: 

45L-18L = 27L (daughter share)

45L-10L = 35L (mother share)

Best option is without consideration.

Thanks Venkatesh Chamarthi for sapring time and sharing advise. We will plan go "without consideration" option based on your advise. 

One last question - do Daughter & Mother has to mention anything in the IT returns with respect to this? if so please enlighten us. I have furnished actual numbers below