capital gains

Dear Vasanth,

Selling a property at a price lower than Market price is not a good option since for tax purposes Sale consideration will be higher of the following -

1) As declared by Assessee

2) As determinded by Stamp Valuation authority.

The resultant capital gains will be taxable in your mother's hand.

Tax neutral treatment will be as follows-

Ur mother can gift the house in favour of her daughter i:e ur sister.

Ur sister can give gifts in cash to her brothers.

Dear,

If the property is sold by your mother to your daughter capital gains will arise in the hands of your mother.

This would be so notwithstanding the fact that the proceeds of sale are distributed by your mother to her children.

The provisions of section 50C would also be attracted in such circumstances.

This section provides that if the sale consideration is lower than the value adopted for registration purposes, the value adopted for registration purposes would be treated as the full value of consideration in computing the capital gains unless the assessing officer makes a reference to a valuation officer who determines a lower amount to be the full value of consideration or where the buyer goes in appeal or revision against the value determined by the stamp valuation authority and such value is reduced in such appeal or revision.

Given this background on the tax implications, it may be advisable for your mother to go for a family settlement settling the property in favour of one of her daughters who in turn would give some amounts to her siblings which would also be part of the settlement.

If this were so, no capital gains tax implications would arise.

Regards

k.Ilayaraja.

thanks to all...........