Tushar Chaudhary 11 December 2020

regarding income tax on long term capital gain

A have some ancestral property in India
A is has a lot of bank loans due to loss in business
A sold his property to clear bank loans and sold the property to B
property market value is 1000 but due to market condition he has to sold it at 6000or7000 rate

his all sale proceeds will be submitting in bank to clear loans

is A is liable for income tax on sale proceeds from property
if yes then he need to pay income tax on market value or sale value

please clear

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4 Replies

Gaurav sharma 11 December 2020

Hello,
As per my view you will have to pay income tax on sale value because it is capital gain.
Re-payment of business loan will not be considered.

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P. Venu (Advocate) 12 December 2020

What is the sale value shown in the deed of conveyance. If the conveyance is undervalued, you could be in trouble with the Income Tax authorities not because of capital gains, but due to other reasons. You may seek the assistance of the professional tax practitioner.

SIVARAMAPRASAD KAPPAGANTU (Retired Manager) 13 December 2020

You need to pay Capital Gains Tax on the differential between the price mentioned in Sale Deed and the market price of the property on the date you had inherited the same and minus certain permissible deductions. Therefore you may engage a Chartered Accountant to make the calculation of capital gain accrued to you and to handle the matter of submission to Income Tax Authorities.

Dr J C Vashista (Advocate) 13 December 2020

Capital tax on income has to be paid on the sale consideration.

It would be advisable to consult a local prudent chartered accountant or lawyer practicing taxation for better analyses of facts/ documents, professional guidance and necessary proceeding.