Long term capital gains and income tax on settlement

1. It basically means gifting the proceeds among family members. If so, no tax is payable on such income by the recipient (viz. yr wife, son & daugher as they are relatives).
2. Since it is long-term capital asset, gain is chargeable to tax @ 20% flat rate + EC. If u could invest the proceeds in any other asset like house/bonds etc, then only exemption is available for this. In case you are not having any other income, then exemption limit for u would be up to Rs.3 lacs.

Originally posted by : Poornima Madhava
	It basically means gifting the proceeds among family members. If so, no tax is payable on such income by the recipient (viz. yr wife, son & daugher as they are relatives). Since it is long-term capital asset, gain is chargeable to tax @ 20% flat rate + EC. If u could invest the proceeds in any other asset like house/bonds etc, then only exemption is available for this. In case you are not having any other income, then exemption limit for u would be up to Rs.3 lacs.

Thank you very much, Poornima Ma'am.

To help me understand this better, say if the capital gain after sale of my house is Rs.50 lakhs or under, should the entire gain be re-invested in bonds or property or only the extent to which taxes on the gain are applicable? I am not really interested in re-investing in property but want to reduce the LTCG to have my family members benefit more from it.

I read in another thread in this forum that there is some Exemption for Capital Gain tax u/s 54EC where it shall be restricted only to 50 Lacs. The thread also says "however you may ,simultaneously , opt for exemptions under other sections [54,54F,54GB]. Note that in some cases you have to invest net consideration and in some you have to invest capital gain."

Please clarify on the above.

For section 54 & 54EC, amount exempt is investment in the new asset or capital gain, whichever is lower. For 54F & 54GB, amount exempt is (Investment in the new asset / net sale consideration x capital gain). So if u want to avail full exemption, u need to invest to the extent of capital gain in case of 54 & 54EC and in case of 54F & 54GB, entire sale consideration to avail the benefit of full exemption.

If u r not interested in investing in another house property, u can buy NHAI/REC bonds and claim exemption u/s 54EC. Option of 54GB also there but its quite tricky. I suggest that u Google for more info and decide.

Thanks again, Poornima Ma'am. This is most useful, i will Google for more information and i hope i can ask questions if any arise.

Thanks again!