The Qury is :"Some 35 years ago, my father in law , alongwith his 3 collegues, purchases a plot in Aurangabad and constrcut 4 residential flats for each on that plot. That time everyone contribute Rs. 40000 each.Atter he passed away, 10 years ago, without making a will, ownership of property is now in name of my mother-in-law and 4 sisters. Now other 3 owners want to develop that plot and as we are not iterested,we want to sell off our share at a consideration of 60 lakhs.
Now what will the tax liability ? Is there any way to reduce it to zero ? or what will be the mimimum tax in this case ? Did indexation applies in this case also ? If we bough long term capital gain bonds, after holding them for 3 years we can redeem them and save entire tax ?Is there any way to reduce it to zero ? or what will be the mimimum tax in this case ? Did indexation applies in this case also ? If we bough long term capital gain bonds, after holding them for 3 years we can redeem them and save entire tax ?"
Reply: 1. "what will the tax liability ? From the query it appears that now the ownersip of the prperty is with your mother-in-law and 4 others.
If the property is now sold, the long term capital gains will be computed as under:
LT CG = Sale Price- (fair market value of the property as on 1-4-1981* Cost Inflation Index for FY 2012-13-to be Notified/100). The proprtionate share of each cowner will beassessable in her hands.As you have not mentioned the exact amounts, the share of each co-owner in the LT-CG, cannot be worked out.
2. "Is there any way to reduce it to zero ? ": Exemption under S.54F, for investment in a new residential house in certain circumstances, may be considered.
3. "what will be the mimimum tax in this case ?":There is no such 'minimum tax". It depends on the amount of share of the capital gains of each of the co-owners, and the amounts of the income ofthe respective co-owner from any other sources. The general rate of tax for long term capital gains is 20% + surcharge if applicable + Educational Cess@ 3% of the total amount of tax+surcharge.
4. " If we bought long term capital gain bonds, after holding them for 3 years we can redeem them and save entire tax ?":
There are no such Bonds, now; only Capital Gains Accounts in the Banks.
