Doubts on Capital Gains Taxation

POSTED BY KKVP1984 ON April 24, 2012 7:03 pm COMMENTS (12)

My father has transferred a plot which he purchased during 1990s to me and my brother. And we are planning to sell it, and construct a house for my brother (at our native place). We have planned to park this amount in Capital Gains Account and utilise it after 5 months to construct house. And I have the below queries,

1. If the sale is made before 31st July (last date to file IT), should I pay tax for the sale?

2. a) Is it mandatory to park the sale amount in Capital Gains Account, as we would utilize the full amount for construction (infact, would be applying for a loan for shortage amount)?

b) If yes, is the answer to above query, should we need to close the Capital Gains Account, as we would utilise the full amount? Can we leave the CAG Account open?

3. Does the piece of land where my brother constructs home, should be on his name to avail Capital Gains tax benefit?

Thanks in advance..KK

12 replies on this article “Doubts on Capital Gains Taxation”

  1. sriyer says:

    I purchased 875 shares of Wyeth Lederle in 2012.This company was later sold to Pfizer in the ratio of 7:10.Pfizer alotted to me 613 shares in the month of January 2015.I sold the shares in August 2015.Kindly clarify whether the transaction will attract any capital gain tax

  2. ashalanshu says:

    Dear Drrekhi, no matter how you are going to use the 95L Rs. amount, your sell price is still 120L Rs. So you do carry LTCG tax liability on you. Yes post construction, you may claim exemption for your LTCG arising from plot sell against the new house.

    Thanks

    Ashal

  3. drrekhi says:

    I have sold a plot to a builder on dec 2012 for 120 lakhs, which was purchased by me in year 1989 builder has paid me 35 lakhs for which I have purchased a new plot the same day and the balance amount of Rs 95 lakh has to be received in kind as construction for house in the new plot I had purchased. As I have not received any cash other than 35 lakh do I have to pay Long term capital gain, The agreement to develop my plot is within 2.5 years. Please advice

  4. KKVP1984 says:

    Yes, my fathers property will be gifted to us and the gift deed would be registered along with the plot sale.

    1. Property will be gifted now in this year to both of us.
    2. Plot was gifted to us 3 years back for both of us.
    3. With the money from plot sale, I would use it to purchase my bro share in the property (gifted).
    4. My bro would construct new property utilizing the entire amount, he got from selling the plot + amount got from selling his part of property (gifted) to me, which was gifted to him

    Hope this makes clear….KK

  5. KKVP1984 says:

    It goes like this…

    1. My fathers property will be shared and I’ll purchase my brothers share, using the amount I’m getting from sale of Plot.

    2. We are planning to register both the sale of plot, and sharing of my fathers property on the same day

    PS: I think my bro has to open to LTCG accounts (one for sale of Plot & one for sale of property to me), and he will be utilizing it fully for construction of new house on his name

    Hope this clarifies..

    Thanks…KK

    1. Dear KK, in the original query, there was merely plot gifted to both of you, now you are saying for a property also from your father. It’s a bit confusing to me. Can we start afresh to handle all the queries.

      thanks

      Ashal

    2. Vikash Sahu says:

      A father sold one immovable property (Building) sale value is 30 lakh part of the amount (15 lakhs) transferred to Son’s Account who is a major then my doubt is in this case what is tax implications?
      Such value of consideration (15 lakhs) which is credited in Son’s Account whose hands taxable?

  6. KKVP1984 says:

    Hi Ashal,

    Thanks for your reply.

    For my LTCG Tax liability, I will purchase my brothers share on the home at native place, hope now I would be exempted from LTCG.

    Thanks…KK

    1. Dear KK, do you mean to say, first you ‘ll purchase the brother’s share from the father property & then sell or ‘ll purchase a share in the new property of brother?

      Please clarify.

      Thanks

  7. KKVP1984 says:

    Thanks a lot for clarifying my doubts, TANMAY THAKOOR

    1. Dear KK, what ‘ll happen to the LTCG Tax liability for your name? As you & your brother both are owner of that property now & gains from the sell of the property ‘ll be between you & your brother. As your brother ‘ll construct a house for himself, he can set off his LTCG tax liability but your case is still open.

      Please clarify.

      Thanks

      Ashal

  8. Dear KK

    Answers to your querry

    1. Income tax work on FY basis i.e Apr-Mar therefore if you sell the property from April-12 – March 13 , the return need to be submitted by July 13
    2.
    a. It’s mandatory to keep the amount in Capital Gains Account if you are not constructing any property, But in your case if you begin construction before July-13 (provided you sold property between Apr-12- Mar-13) you can use entire amount to construct the new house property no need to invest in Capital Gains Account.
    b. CGA accounts need to be closed and cannot be kept open.
    3. YES The new property shall be in brothers name
    Regards

    Tanmay Thakoor (tanmay2000@gmail.com)

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