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section 50c and 56(2)

chaudhary.akanksha77@gmail.com (50 Points)

05 July 2018

Hi, I am having a gifted property from non relative for which LTCG is airsing which I am also adjusting by investing in new house by considering his cost and year of acquisition. Now one of my known is saying i have to pay tax on income from other sources on same property under section 56(2) being from a non relative. If so is not it a case of double taxation on the same property. Please advice.

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13 Replies

CA Sachin Agarwal (Chartered Accountant B.com (Accounting Hons)) (831 Points)
Replied 05 July 2018

Please inform as to when did you acquired the property and are you planning to sell the same?

chaudhary.akanksha77@gmail.com (50 Points)
Replied 05 July 2018

actual owner bought it in 1998. he transfered to me through gift deed in august 2017. i sold it in january 2018 and bought new house in feb 2018 out of the money received. thanks

R. CA (121 Points)
Replied 05 July 2018

Income from other sources will be taxable if we acquire any gifted property other than relative u/s 56(2)(x) if stamp duty value will exceed 50000rs. and you can take the benfit of section 54 by investing in other house property under capital gains.

chaudhary.akanksha77@gmail.com (50 Points)
Replied 05 July 2018

Thank you. But that is the question we are paying taxes twice on the same thing in the same year.

CA Sachin Agarwal (Chartered Accountant B.com (Accounting Hons)) (831 Points)
Replied 05 July 2018

Yes , you are liable to pay tax as income from other sources as per Section 56(2)(vii)(b).
Once you pay tax on the stamp duty value of this house considering it as income from other source
then further since you have paid the tax on the same, the stamp duty value becomes the new cost for you and period of holding shall be reckoned from the dtae of transfer of the capital asset to you.
Thus in your case if you are selling property in January 2018 then it it will be either STCG/STCL depending upon new Cost Of Acquisition and Period of holding

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chaudhary.akanksha77@gmail.com (50 Points)
Replied 05 July 2018

Thanks if that is the case. at what price do i need to pay tax on income from other source means shall i subtract stamp duty amount i paid for it from total value or on total value or on total value plus stamp amount. Please reply

R. CA (121 Points)
Replied 05 July 2018

No you are not paying taxes twice. As stamp duty value will be taxable under income from other sources therefore while calculating capital gains your cost of acquisition will be stamp duty value otherwise your cost of acquisition will be nil and your capital gains Will be higher.

CA Sachin Agarwal (Chartered Accountant B.com (Accounting Hons)) (831 Points)
Replied 05 July 2018

You are requires to pay tax on Stamp duty value of house transferred to you.

CA Sachin Agarwal (Chartered Accountant B.com (Accounting Hons)) (831 Points)
Replied 05 July 2018

Even if you are not clear by now then please post your query to my mail.

chaudhary.akanksha77@gmail.com (50 Points)
Replied 05 July 2018

Thank you sir. Just last thing is there anyway by which we can save it to some extent or else it will be very high in my case. Like by considering cost and year of acquisition of actual owner and pay capital gain based on that by skipping IFOS

CA Sachin Agarwal (Chartered Accountant B.com (Accounting Hons)) (831 Points)
Replied 05 July 2018

You cannot skip IFOS in any case

chaudhary.akanksha77@gmail.com (50 Points)
Replied 05 July 2018

Thank you sir for all your answers and help. Regards

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Kavita Modi (CA Job) (232 Points)
Replied 19 July 2018

While calculating the Long term Capital Gain what cost of acquisition you have considered. You must have indexed the cost of property incurred by the person who has gifted you this property Since you paid the Capital gain on difference value of Sale and cost of acquisition however your cost of acquisition was nil hence you are not going to pay the double tax infact you are violating the law if you don’t pay the tax on this gifted Property.