Clarification capital gain

Tax queries 307 views 2 replies

Sriram Windchill

Accountant

42 Points Joined March 2016

Dear Users ,

Pls advice with your experience on the clarifications I have got on managing the Capital Gain,

My GrandMother (in her last stage of life) has got captital gain money deposited in a C.Gain account in a nationalised bank. As per the regulations the CG amount can be used to adjust with new property. She has got 4 children (2 daughter, 2 sons) and feels she has already done best to her daughters and feels the property that has to be bought from the CG account has to be divided in 2 halfs among the sons.

1. Since she is counting her days what will happen to the CG amount that is deposited in her name . Can it be split among the sons (or) will daughter demand proportion from it (or) will it be taken by I.T .... . Meaning what will happen to the CG account and how can it be used to benifit her sons.

2. Incase if a property has been bought adjusting the CG amt , can the daughters claim portion of it ? What can be done to avoid it.

Pls advise.

Regards.

Ram

Replies (2)

Mihir

Wealth Manager

5293 Points Joined December 2008

She may leave a Will stating her wishes on who shall be the beneficiary(2 sons) of her property, as well as the 2 daughters also need to make an declaration that they or their family shall not claim any rights from this property in the future.

Shivam gupta

student

263 Points Joined December 2009

the amount deposited in capital gain deposit scheme is to be utilised by the assessee within a period of 2 yrs/3 yrs as the case may be. If such amount remains unutilised till the expiry of above mentioned period, then it will be taxable in the hands of the assessee.

but in case, the assessee dies and the such amount remains unutilised, it will not be taxable in the hands of legal heir of the assessee. because such unutilised amount is only an asset devolving upon them, it is not in nature of income in the hands of the legal heir.(CBDT circular )

therefore..

1- if the amount is splitted among the sons before the the death of the assessee then it will be taxable in her hand(mother). in case such amount is recieved by the sons as legal heir after the death of the assessee then it will not be taxable, provided the death of mother has occured before expiry of 2/3 years.

2. mother should purchase the house in his name and should distribute the property in name of sons equally by executing 'will'. Alternatively she may aquire the property in the name of her sons but it may result in unnecessary litigations in department.