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Capital Gains & Income Tax Liability

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Sanjay

Service

20 Points Posted on 26 December 2023

Senior Citizen (80+ age) wants to sell one of his residential properties and divide the proceeds between his children.

I understand the IT rule is that Capital Gains has to be paid by Senior Citizen after sale and balance amount after deduction of Capital Gains can be gifted to his children.

1. Now, is there any Tax liability on Children once the amount is received in their Bank Account after deduction of Capital Gains by Senior Citizen. Do they need to show proof of funds etc. to Bank or for IT Assessment, if any. What proof, if required could that be.

2. Is there any way to save Capital Gains by Children. Senior Citizen does not want to re-invest the proceeds.

Replies (6)

Quick Summary

An 80+ year old wishes to sell a residential property and gift the proceeds to their children. The main concern is the capital gains tax liability for the senior citizen and whether the children will face any tax or reporting requirements upon receiving the gifted funds. The discussion explores options for tax efficiency, including gifting the property itself rather than the cash proceeds.

sabyasachi mukherjee

Profession

20 Points Posted on 26 December 2023

Capital gains and taxability for 80 plus age is taxzble after 5 lacs.

Sharath chandra

Accountant

20 Points Posted on 26 December 2023

1. no liability on amount received.
2. no. has to pay income tax on capital gains. no way to save tax without reinvesting.

sabyasachi mukherjee

Profession

20 Points Posted on 26 December 2023

You know nothing.
follow provision of sec 54f. sec 54ec

Sharath chandra

Accountant

20 Points Posted on 26 December 2023

Did you even read the question properly.

CA Raj Doshi

Practising CA

20 Points Posted on 27 December 2023

1. Net Funds transferred by father to children as gift are taxfree in hands on children

Sec 56(2)

2. There is a way to save capital gains. The answer is by deferring the sale. Make senior citizen understand that more tax efficient way to distribute money to children is to gift them the property itself ( gift in kind ). There is no tax on it. Refer same section.

Gift in cash vs Gift in kind - it's still a gift to children - but in a tax efficient way

Rgds
CA. Raj Doshi
R C D & Co.
Chartered Accountants
Kandivali West,Mumbai