Ashique (Self Employed) 17 January 2014

Regarding capital gain tax on sale of land

Facts

1) Original Buyer (A) (late husband of present owner/father of present owner) as mother and son both are now co-owners now) bought 4 Katha 10 Lecha land on 04 Sept 1981 for a consideration Amount : Rs 4000 .
2) On death (11May, 2009) of original buyer (A) land transferred to his legal heirs-wife (X) & son – (Y) on 21.5.2011.
3) X & Y Sold part of transferred land measuring 1 Katha 1 Lecha on 8 Jan 2014 for an amount Rs 12,60000. This amount paid by cash.
4) Both mother (senior citizen) (X) and son (Y) of the deceased are not taxable- below tax slab (less than 2 lakh income)

Questions
1) What will be the capital gain tax on this amount (12,60,000). Whether it will be short term or long term capital gain tax (will it be short term because they sold the land within 3 years from the time it was inherited or will it be long term since it is inherited property? If short term / long term how much will be the tax on X & Y?
2) Will wife and son of deceased have to share the tax equally, as both are now joint holders of the land. I mean the capital gain will be divided between the two 1260000/2=630000 each?

3) What are the ways to save on tax?

Reply Follow

2 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 ) 21 January 2014

tax saving option is available under Section 54F wherein the gain is exempt from tax if the entire sale consideration is invested in the purchase of one residential house property within one year before or two years. Or, the individual can construct one residential house within three years after the date of such transfer. If the entire consideration is not invested, exemption on gain will be allowed only proportionately. This benefit is available only if the individual does not own more than one residential house property exclusive of the one bought to claim exemption under Sec 54F.rs after the date of transfer of such asset.

1 Like

Ashique (Self Employed) 21 January 2014

Originally posted by : ramachary64@gmail.com
	tax saving option is available under Section 54F wherein the gain is exempt from tax if the entire sale consideration is invested in the purchase of one residential house property within one year before or two years. Or, the individual can construct one residential house within three years after the date of such transfer. If the entire consideration is not invested, exemption on gain will be allowed only proportionately. This benefit is available only if the individual does not own more than one residential house property exclusive of the one bought to claim exemption under Sec 54F.rs after the date of transfer of such asset.

we want to construct a new house, but we will construct only next year around january, so is it mandatory to keep the amount in capital gain account saving scheme (CGAS account) or we can keep the amount in normal savings account also till next year to avail of tax saving