tax on long term gain


Dear Sirs,

Recently my father-in-law died. He has property in Ghaziabad. He has 3 daughters. If the property is sold and money devided in 3 sisters. All sisters are planing to buy preperty. Now I have following questions.

1. Do they need to buy property, which should be registered within one year or they can buy flat in Noida and  get the registery done in next 2 to 3 years time.

2. How the gain will be calculated and how much tax will be paid? Say the property has been purchased in 1998.

Thanks

Ajay

 
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Advocate

1. Do they need to buy property, which should be registered within one year or they can buy flat in Noida and  get the registery done in next 2 to 3 years time.

Ans. Time limit for acquiring the new assets Purchase :1 year back or 2 year forward, Construction: 3 year forward

2. How the gain will be calculated and how much tax will be paid? Say the property has been purchased in 1998.

Ans. The cost and the date of acquisition to calculate this capital gains tax are to be taken as that of the “the previous owner”. For example, if you have inherited the property from say your father, you will have to adopt the cost that your father paid originally when he first purchased the property. In computing gains arising on the transfer of a long-term capital asset, S. 48 of the Income-tax Act requires deduction of the indexed cost of acquisition of the capital asset from the sale consideration. The indexed cost of acquisition is computed by multiplying the cost of acquisition by the ratio of the cost inflation index for the year of transfer to the cost inflation index for the first year in which the asset was held by the assessee or for 1981-82, whichever was later. When a capital asset is acquired by an assessee by gift, inheritance, partition of a Hindu Undivided Family or under any of the other modes specified in S. 49(1), or some other modes specified in certain clauses of S. 47, under Explanation 1 to S. 2(42A), the period for which the asset was held by the earlier owner or in the earlier form is also to be included as part of the holding period of the assessee for determining whether the capital asset is a long-term capital asset or a short-term capital asset.The mode of computation of capital gains has been prescribed under Sec. 48 of the Income-tax Act. It allows, inter alia, the cost of acquisition of the asset and the cost of any improvement. 

 
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Senior Financial Advisor

Hi,

Firstly u need to get it checked ,as to whether the money being distributed among the sisters ,will qualify to be "capital gain".Capital gain is the difference between Sale price & cost price.The sister don't own the property.It is the consideration of the property,owned by their father,being distributed among the sisters.Pl check.If the money ,being distributed among the sisters is according to the will of the father,then the money (part of the consideration)received by the sisters will not be taxed in their hands.

 
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