Capital Gains tax exemption

Ganesh246 1
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Dear Sir/Madam,

My father had purchased a flat 30 years ago and this was transfered to my name in April 2008. My father passed away in October 2008. This property was sold recently for 57 lacs. It was split as 70% plus 30% share as per the WILL given by my father. 70% share was for me and 30% share was given to my 2 brothers and my mother of 10% each.

Now I plan to buy another flat from my 70% share and I have kept this money in my savings bank account. I would like to know if my share attracts Capital Gain Tax and how I can save the tax? Is it mandotory for me t open a capital gains account with the bank? Can I make a Fixed Deposit of this money until I find another property? I am a pensioner and my current income is under taxable limits.

Thanking you,

Regards, Ram

ancestral-property long-term-gain capital-gains income-tax
1 Answers

First compute long term gain using following method:

Purchase Year = A (30 years ago), Purchase Cost = P (Purchase cost as incurred by your father), Cost Inflation Index (CII) for purchase year = X
Sale Year = 2012-13, Selling price = 57 lacs, CII for sale year = 852
Indexed Purchase price = P x (852/X) = R
Long term capital gain = 57,000,00 - R = S

Your share in long term gain would be 70% of S. 20% income tax would be payable to you on this figure.

To save this income tax fully, you can invest this gains amount into another residential house property u/s 54 or into capital gain bonds u/s 54EC.

If section 54 is used, possession of new residential property should be taken before end of two years from date of sale. If construction is getting done yourself, construction must complete within three years of sale. In case this (possession/construction) is done before 31st July 2013 (last date of return filing for financial year in which sale occurred), there is no need to deposit amount into capital gain scheme account. If it does not happen, gains should be invested into capital gain scheme account.

if section 54EC is used, gains should be invested into capital gain bonds (NHAI or REC) within six months from sale.

Pankaj Batra5212
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