I do not understand what you mean by saying "This arrangement is to be done only for distributing income tax and LTCG benefits." What LTCG Benefit that you are talking about? Since LTCG tax will be uniform 20% on the gain and there is no slab rate applicable, it is not clear how there will be any tax benefit by distribution of the long term capital gain?
In the normal circumstances, If nothing is mentioned in the Sale Deed (Purchase document), then it will be presumed that each party has equal share in the property. Your deducting 25% and 75% TDS is not proof and it would not determine the parties share in the property.
Therefore, now when you sell, ask the buyer to deduct 1% TDS for half of the consideration in your hand and 1% on the remaining half of the consideration in your wife's hand. He has to issue two cheques one in your name and another in your wife's name after deduvting 1% TDS from each of you.
That's all. No other requirement as being proposed by you.
HOWEVER, When you say "TDS was deducted in this ratio and same is declared in returns", are you merely referring to TDS or did you file any income tax return wherein it has been said that you own 75% and your wife owns 25% in the property. Or whether you have shown any rental income from the flat in the income tax return at 75%-25% between yourself and your wife? THIS POINT NEEDS TO BE CLARIFIED BY YOU. My answer will change depending upon your answer to this point.
