Inherited property

A GOVIND (Querist) 09 December 2013 This query is : Resolved
Hello Sir,

My mother died one year back. I am a non resident settled in the US. I have 2 sisters who live in India.We three are the legal heirs of this house property. We are planning to sell the property. I would like to know what would be the tax implication if we want to sell the property. Please enlighten me. Will the sale of inherited house attract capital gain tax? Will section 194IA and section 195 apply in this case?

Thanks

Govind

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DILIP KUMAR AAGARWAL (Expert) 09 December 2013
you all are laible for long capital gain if the property is older than 3 years and short term if period is less then three years.period will be counted from year of purchase of property not from the date of inheritence. if sale value if more than 50 lakhs then you have to deducted TDS. One thing you can do if value of sale is less than 150 lakh then preapre three deeds of 1/3rd share of each showing less then 50 lakhs then you will not be laible to deduct the TDS.

Rajendra K Goyal (Expert) 09 December 2013
Under the Provisions of the Income Tax Act 1961, in the case of purchase of property from a non-resident the purchaser is required to deduct tax at maximum
marginal rate of 30.9% on short term capital gains or 20.6% on Long term Capital Gains earned by the Non-Resident. This means that the buyer of the property will withhold tax @ 30.9% or 20.6% on Capital gain on sale of the property/asset. If the
buyer does not have details of the cost or actual tax liabilities he may withhold tax @ 30.9% or 20.6% on sale proceeds.

Thyagarajan (Expert) 09 December 2013
More than what experts suggested try to get details how your mother got her property in her name.

C. P. CHUGH (Expert) 09 December 2013
Q-I would like to know what would be the tax implication if we want to sell the property. Please enlighten me. Will the sale of inherited house attract capital gain tax? Will section 194IA and section 195 apply in this case?

Ans : Since you appears to be having fair kowledge of law, the specific answer to your question is ;
a) Yes it would attract Capital Gains
b) In case the consideration exceeds
Rs. 50.00 lacs, provisions of section
194-IA would apply.
c) Yes in your case provisions of section 195 would apply.

Thanks