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Sale of inherited property-income-tax liabilities

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Naresh B Jumani

29 Points Posted on 27 December 2021

My mother bought a flat on 12-05-1999 for Rs 7 Lakhs from her own self-acquired funds, it is not ancestral property. My father had passed away earlier in 1983. She got the Khatha transferred to her name. My mother passed away intestate on 21-11-2007. Left behind 3 sons and 1 daughter as the only surviving heirs.

On 06-06-2014 my 2 brothers and sister relinquished and renounced their share in the property (1/4 each) to their
blood brother, i.e. to me.

Thus I (the vendor) became sole and absolute owner of the propery and got the Khatha transferred to myself and been paying the Property Tax to BBMP.
I offered and sold it to for a sum of Rs 49.25 Lakhs on 15-12-2021.

Is there any income-tax liability? If so how much? Please tell me how to calculate it also.

Replies (3)

Quick Summary

This discussion clarifies the income tax implications for selling an inherited property. The original owner purchased the flat in 1999. After her passing, her children relinquished their shares to one sibling, making them the sole owner. This sibling then sold the property in 2021. The advice provided confirms a Long Term Capital Gains (LTCG) tax liability and outlines the calculation method, including indexed cost of acquisition and the applicable tax rate.

TAX filers

28 Points Posted on 27 December 2021

Yes. You are liable to pay tax on Long Term Capital Gains.
Calculation of LTCG = Sale price - Indexed Cost of acquisition
= Rs.49.25 - Rs.7.00(3.17)
= Rs.49.25 - Rs.22.19
= Rs.27.06 lakhs is the LTCG
tax is 20% on LTCG i.e 5.41 lakhs
you may also claim cost of development too if there is any.
the above calculation is done considering that you have not paid any amount to your brothers/sister when they relenquished their rights on the property.