Tax Saving

Pankaj C 6
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Sir,

I had purchased a land worth Rs. 80,000/- in 2004 and sold it worth Rs. 13,00,000/- in 2010-11. I deposited Rs. 10,00,000/- in my Mother & Father joint account for a week. After a week, I purchased a residential property worth Rs. 10,50,000/- on my Father's name. Recently, My mother got a notice from IT Dept. to justify the amount Rs. 10,00,000/ deposited in her account.

I also have purchased a flat worth Rs. 24,50,000/- on my name in 2011 by paying Rs. 5,00,000/- as a downpayment and rest of the amount by taking loan.

My question is, How to justify the amount Rs 10,00,000/- to save the tax fully. Will the residential property purchased on my father's name be cosidered to save the tax fully? or Do I need to show my residential property details to save the tax fully? How much tax can I save?

Please advice.

Thanks, Pankaj C.

gift-to-parents section-54f long-term-gains capital-gains income-tax
1 Answers

First, you can show 10 lakh deposited by you in your mother account as gift. Prepare a gift deed on simple paper signed by both you and your mother. But this transfer won't save you from income tax payable on gains earned from land sale.

Residential house purchased on anybody else's name won't save you from income tax on capital gains.

As land was sold in 2010-11, if you wanted a tax deduction on capital gains, either you should have bought a residential house property and got possession for same before 31st July, 2011 or should have deposited whole sale consideration into capital gain account scheme. If nothing was done, you won't be eligible for tax saving u/s 54F and nothing can be done now to save income tax.

Pankaj Batra5212

Sir, The property was acquired under my name in the month of April-2011 and the property is still under constrution. Can we save the tax on under construction property? How much penalty can be charged for late tax payment on capital gains?

Thanks, Pankaj C.

Pankaj C•

As land was sold in 2010-11 and property acquired was under construction, to get tax benefit u/s 54F, you should have deposited sale consideration of land into capital gain scheme account. Income tax can be saved on buying under constructing property if possession for same should be received within two years from sale and amount was deposited into capital gain accounts.

Late payment penalty of income tax is around 1% per month each for section 234B and 234c.

Pankaj Batra•

Sir, Thank you so much for your help....

Thanks, Pankaj C.

Pankaj C•
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