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M.Anand   17 September 2016

Capital gain tax exemption

My mother and me purchased a flat JOINTLY for 40lakhs(each contributuing 20 lakh),in 2011,through a single registered sale deed.This property is letout and we are sharing the rent equally.

My mother purchased a plot of land, in 1980 (for Rs 1074 only),and in 2011,GIFTED 1/4 share in land, to each of her 3 sons, by way of a single registered gift deed, retaining 1/4 share for herself. NOW, all 4 of us,are selling that land, for a sale consideration of 1.8 crore .Each of us will get 45 lakhs. 

After valuation( since property purchased before indexation started-in 1-4-1981)+ indexation till 2016, the cost of acquision will be around 1 lakh, and the capital gains will be 44 lakhs.

Now, I wish to claim Capital Gain Exemption,under  sec 54F, by

1. Paying my mother 50% of the market value of the flat , purchased in 2011 jointly,and Transfer her share of property, to my name(the entire flat will be in my name).Mother is agreeable to this.The present market value of the entire flat is 50 lakhs. IF, I do this transaction via a regular SALE DEED , the cost of STAMP DUTY AND REGISTRATION is very high. Is there ANYOTHER WAY, I can accomplish this, without having to spend a big amount? SAY a GIFT deed/ Release deed/or any other legal document?

2. After paying my mother 25 lakhs, 19 lakhs will be remaining , which I want to put in REC/NHAI CG Bonds OR in a Capital gain account, in a bank. Is it ok?

In none of the TAX/LEGAL forums on net, I could find an answer to this. Also, on enquiring with 2 of my lawyer friends, I got different opinions. I AM confused. I request all the legal luminaries to give me, the CORRECT advise, WITH  Relevent  references.  Many thanks in advance.  ANAND


 4 Replies

Kadem Ramesh (Advocate & Tax Consultant)     17 September 2016

first you are not mentioned the plot is commercial or residential , if it is residential your investments is ok this can be exempted u/s 54f of income tax act.

M.Anand   17 September 2016

Thanks Mr Ramesh for the prompt reply. The land is residential.My main query is--- IF I do the transaction by REGULAR SALE DEED, the expenses are high. Can I do the transaction by GIFT deed/ RELEASE deed or any other legal document, with much less expense( than doing by sale deed)

Kadem Ramesh (Advocate & Tax Consultant)     19 September 2016

you can make a RELEASE DEED

Ms.Usha Kapoor (CEO)     22 September 2016

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