Query with respect to selling of the property.

Tax queries 342 views 2 replies

lovelyvirmani

Others

32 Points Posted on 25 March 2015

Respected Sir/Madam,

This mail is in regard to our ancestor old freehold property in Malviya Nagar, New Delhi owned by our mataji of age 87 years. The property was owned in the year 1970 and today in the year of 2015, the mataji is willing to sell the property to her daughter. After interaction with property consultant they advised either the property can be sold via Sale Deed or via Gift deed.

We are looking forward to seek your advice of which path is advisable while selling the property. Also in the same context we are having following two queries:

1) Sale Deed: The property in year 1970 was valued as Rs 15000. If the same property is sold in the year 2015, then what will be the income tax liability (if any) on mataji?

2) Gift Deed: If the property is given to daughter as gift deed, then will there be any tax liability on mataji? Also while making the gift deed, is there any other documentation required from the other legal heirs.

Kindly support to share your valuable response.

Thanks and Regards///

Mohit Virmani

9582260269

Replies (2)

Vishal Goel

Chartered Accountant

1693 Points Posted on 30 March 2015

Gift received from Relatives is fully exempted from the levy of tax and no income tax would be levied on such Gifts. To remove any confusion regarding the classification of Relatives, the Income Tax Act has very clearly laid down that only the following would be treated as relative for the purpose of claiming exemption from payment of Gift Tax:-

Spouse of the Individual

Brother or Sister of the Individual

Brother or Sister of the spouse of the Individual

Brother or Sister of either of the parents of the Individual

Any Linear ascendant or descendent of the Individual

Any Linear ascendant or descendent of the spouse of the Individual

Spouse of the person mentioned above

Gift deed : To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it. Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid.

Capital gain shall not chargeable on mataji if property transfers as gift.

Vishal Goel

Chartered Accountant

1693 Points Posted on 30 March 2015

if property sale by Mataji then such transcatiion shall be charged to capital gain :

Long term capital gain arising on account of transfer of long-term capital asset will be computed as follows:

Particulars	Rs.
Full value of consideration (i.e., Sales consideration of asset)	XXXXX
Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, advertisement expenses, etc.)	(XXXXX)
Net sale consideration	XXXXX
Less: Indexed cost of acquisition	(XXXXX)
Less: Indexed cost of improvement, if any	(XXXXX)
Long-Term Capital Gain	********