Ca[ital gains tax on inherited property
Ayappan
(Querist) 01 July 2012
This query is : Resolved
The property was acquired by the ancestors way back in 1913. After two generation the property is offered for sale in the year 2012. The property is within 8 kms of the muncipal limits. As the index base year is from 1.04.1981 what value need to taken as on 1.04.1981 for the prorperty if acqusition value is say Rs.1000 per acre.
The property will be divided into two for fathers of first generation and among themone of them have 9 legal heirs who is of second generation and current generation will divide the property sale proceeds in various ratios as due to each individuals as per their rights. What will be the tax impact on each individual.
Saurabh Bajaj
(Expert) 11 July 2012
First step is to compute the CII index value of the property. Lets call this value as X.
Second step is to deduct this X from the sale value of the property. This is the long term capital gain (Y).
This Y divided by 9 will be the capital gain of 9 legal heirs.
Since further info is not provided, I will be able to guide upto here only.
There will be a 20% tax on the Long term capital gain. If you want to save this tax, you can invest in bonds u/s 54EC.
Ayappan
(Querist) 22 July 2012
How to arrive at CII index for a value of property Rs.1000/- in the year 1913. When the base year is 1981. The property is located say in the municipal limits of Erode, in TamilNadu.
Saurabh Bajaj
(Expert) 22 July 2012
As per your query, I understand that, the base value as on 1.4.81 is Rs. 1000 per acre.
You can take the CII index of 1981 as 100 and current CII index and accordingly compute the capital gains.
For more details, you may write a mail to saurabh.nidhiinvestments@gmail.com
