Long term capital gain Tax

Tax queries 865 views 6 replies

Ajit Chonkar

Consultancy

32 Points Joined January 2009

Hi,

My father had bought a flat in Andheri Mumbai in 1960 (exact cost not known). At present the flat stands in the name of my mother (84yrs alive) only, we are 3 heirs to the property, elder sister (25% share) myself (37.5% share) and younger brother (37.5% share) have decided to sell the flat and share the proceeds in mutually agreed proportion. I would like to know whether I would have to pay Capital Gains tax if I happen to invest my entire share in a new flat in Mumbai, while the other two recipients wish to enjoy their cash proceeds. My mother will be the only party to the sale agreement. For calculation of Long Term Capital gain Tax which year has to be taken as a base year for Cost Inflation Index.

Please advise.

Thanks

Ajit

Replies (6)

CA Manish K Dhoot

CA B. Com NCFM CPCM

5015 Points Joined February 2008

1981 will be taken as base year for cost inflation index

CA. Nitin Agrawal

Chartered Accountants

1066 Points Joined February 2008

What is taxable is in the hands of transferor (ur mother) So there is no question arise about the taxability in the hands of legal heirs the exemption will be available only to the transferor (i,e ur mother)

C.Balaji

Learner

1867 Points Joined October 2008

if u now sell the flat ur mother will be the owner and capital gains will be taxed in her hands.. if u three wants to share the CG, one way of doing is through a properly drafted agreement and then you can invest the gains by legitimate tax planning.... CII for the flat will be 1981 - 100. since the property was purchased before 1.4.81...

VARUN

PCC STUDENT

523 Points Joined April 2009

agree with what C.Balaji has said ... and if u invest the proceeds amount in buying one or more house property then the exemption will be availed as per sec. 54 which is equal to the amount invested .. and the amount invested must be before the date of filing of return. or if u deposit the amount to be invested in the CAPITAL GAIN DEPOSIT SCHEME then the time for investing in property increases to two years ..... if u want more details please refer sec. 54

Regards

Varun Makhija

C.Balaji

Learner

1867 Points Joined October 2008

as rightly said by Varun please refer sec 54 and also 54ec.... 54ec also allows exemption on sale or transfer of Long term capital asset...

CA Anurag Garg

Chartered Accountant

339 Points Joined July 2008

yes asset must be trf to all of u through a gift deed first n cost of previous owner ie FMV as on 1.4.81 in ur mother's hand will be considered while arriving at ur taxablity then u can use sec 54 n can claim exemption