leopold 11 November 2017

Income from ancestral property sold

Recently my self and my siblings agreed to sell our Ancestral propert,y which is in my Mother name who had expired without leaving any will few years back. now there is a good offer for the Property ( land with builing). after selling the property the amount which is deposited on our bank account will be taxable are what ,if so how much percentage will be Taxed.

Property details: The property was purchased on 1971 on my mother name and we had built a G+2 house and we three sibings were staying in it till now, kindly let me know after sale and receiving our shares and deposit in bank , how much percentage we will be taxed for it.

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R.Ramachandran (Advocate) 21 November 2017

1. You have to first ascertain the fair market value of the property (land+building) in the financial year 2001-02. The Govt. has revised the base year for ascertaining the indexed cost of acquisition from the earlier year 1981 to 2001. That is why, you have to ascertain the Fair Market Value of the property for the financial year 2001-02. This can be obtained by approaching any Government approved Registered Valuer.

2. Once such a fair market value of the property in the financial year 2001-02 is ascertained, then you have to calculate the amount of capital gain.

3. Capital gain = (Sale proceeds less Indexed cost of Acquisition.)

4. For fair market value of the financial year 2001-02 the base index is 100. The index for the financial year 2017-18 is 272. Therefore, assuming the property value was Rs. 1,00,000/- in the year 2001-02, then the indexed cost of acquisition of the property in the year 2017-18 would be: Rs. 1,00,000/- x 272 divided by 100. Which comes to Rs. 2,72,000/- If your sale proceeds is Rs. 5 lakhs, then the Capital Gain would be Rs. 5 lakhs minus Rs. 2.72 lakhs - 2.28 lakhs. On this amount of Capital Gain Rs. 2.28 lakhs one has to pay 20% Capital gains tax. That will come to Rs. 45,600/-