Capital gains tax on nherited property
pankaj
(Querist) 27 June 2014
This query is : Resolved
my grandfather bought a flat in new delhi in 1960 for Rs 20000 .
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the property was inherited by my father in 1995 .
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which in turn was inherited by my mother and I , after my father passed away in 2001.
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in May this year 2014 , we have sold this property for 3.25 Crore
my father had spent Rs 5 lacs for building a structure on the second floor in 1996.
there are a couple of points i would need clarity on :
- the indexation of fair market value of property would be considered from 1 april, 1981 or from the date my mother and i inherited the property from my father i.e 2001 .
- my mother and i could invest 50 lacs each in tax saving bonds(NHAI, Rural electrification scheme) or is it the combined limit .
could you help me with the calculation of capitals gain . i would really appreciate our help in this regard .
thanks
pankaj
Anirudh
(Expert) 28 June 2014
Dear Mr. Pankaj,
First you have to arrive at the fair market value of the property as on 1.4.1981 and thereafter apply the index to arrive at the indexed cost of acquisition of the property.
After arriving at the exact capital gain, you (your mother and you) have to invest the entire amount of capital gain in the tax savings bonds mentioned by you.
pankaj
(Querist) 28 June 2014
Dear Mr Anirudh and Mr Sankar
thanks for your advise .
but i need a bit more clarity on the point that from which year the indexation of the property will take place .
-is it from 1981 or
- from the year my mother and i inherited the property from my Father i.e 2001 .
and the fair market value of of which year would be considered for computation of capital gains
Anirudh
(Expert) 28 June 2014
It will start from the year 1981 (that is the base year whatever value that has been adopted on 1.4.81 will bear indexation subsequently from thereon).
T. Kalaiselvan, Advocate
(Expert) 28 June 2014
If you are still not satisfied with expert Mr. Anirudh's explanation, you may consult a local auditor or a tax consultant for further opinions.
pankaj
(Querist) 28 June 2014
thank you all , for your guidance on this capital gains issue
