Tax issue through selling land
Himpriya
(Querist) 18 June 2015
This query is : Resolved
Hi team my query is we have sold some portion of our land money will be coming in cheque form total amount is approx12 lakhs.we are planning to deposit this in my mother's saving account but she is not having pan card.please help will there be any issue of tax on this amount if cheque deposited in a single go.
Himpriya
(Querist) 18 June 2015
Please solve the query
Anirudh
(Expert) 18 June 2015
Whose land it was?
Who sold it?
Himpriya
(Querist) 18 June 2015
It was my father's land we sold a portion of it to a buyer.
Anirudh
(Expert) 18 June 2015
Why do you want to deposit in your mother's SB A/c. What is the purpose and idea?
Himpriya
(Querist) 19 June 2015
We will deposit this amount can use it in future purpose.
Himpriya
(Querist) 19 June 2015
We will deposit this amount can use it in future purpose.also need to tell my mother do not have pan card
Rajendra K Goyal
(Expert) 19 June 2015
Get the PAN issued. If the land was in father's name who signed the sale letter? consult local lawyer and show him all the documents.
Anirudh
(Expert) 19 June 2015
Please understand the following:
1. As you have sold the land, which was with you for more than three years, you have to pay Long Term Capital Gain on the amount of capital gain that you derived in the sale.
2. Capital Gains Tax is 20% of the amount of capital gain.
3. Capital Gain is the difference between the sale consideration minus the indexed cost of acquisition of the Asset.
4. It is very clear that with the money that you received on sale of the land, you are not going to buy any property to save the Capital Gains Tax.
5. There are methods whereby the exemption from payment of Capital Gain Tax can be availed. One of the methods is to deposit under Section 54EC of the Income Tax Act, the entire amount of capital gain (not the entire sale proceeds BUT only the capital gain portion) in either NATIONAL HIGHWAY AUTHORITY BOND; OR BOND ISSUED BY RURAL ELECTRIFICATION CORPORATION LIMITED.
6. PLEASE NOTE THAT DEPOSITING THE AMOUNT OF CAPITAL GAIN IN SAVINGS BANK ACCOUNT OR ANY OTHER ACCOUNT WILL NOT QUALIFY FOR EXEMPTION FROM PAYING CAPITAL GAINS TAX. Therefore, you have to take the Bond as suggested at paragraph 5 above. Taking Bonds (though interest rate is only 6% and the interest is liable to tax) is highly beneficial. This is because, you save the amount which you would have paid as tax. This more than off-sets the higher interest which you would have got on the amount of interest if you had taken Fixed Deposit etc.
7. While making the deposit in any of the above bonds, please DO IT IN THE NAME OF ALL THE THREE OF YOU JOINTLY. You can apply for PAN number for your mother. It will be given to you within 10-15 days or maximum within a month's time.
8. Good that you asked for clarification here. Please do not ignore to follow the correct path even if you are not having readily the PAN for your mother, which you can always apply for and get. Please all the three of you file your I.T. return and indicate the sale and claim exemption from Capital Gains Tax by indicating that you have taken BOND. If you fail to do, please remember, you will certainly get notice from the Income Tax Department subsequently, as they are getting all the transactions from all the important sources (because law compels the sources to report to I.T. Department) like Sub-Registrar's office, banks etc.
Himpriya
(Querist) 19 June 2015
Thanks for the explanation.it is quite so unable to understand please state the action course in layman language.also can I get tht amount deposited in my account I have pan card.also in one of the query asked by some other person you said if amount comes with cheque there is no issue.I want to follow only legal way.do u want me to deposit the amount and pay tax and then file for return?
Anirudh
(Expert) 20 June 2015
1. YOU CANNOT DEPOSIT THE AMOUNT IN SAVINGS BANK ACCOUNT - WHETHER IN YOUR ACCOUNT OR IN YOUR MOTHER'S ACCOUNT OR IN YOUR BROTHER'S ACCOUNT.
2. You have to take BONDS issued either by NATIONAL HIGHWAY AUTHORITY OF INDIA, or RURAL ELECTRIFICATION CORPORATION LIMITED.
3. Pl. apply for and get a PAN number for your mother. You will get it within 1 months. PLEASE DO NOT IGNORE THIS REQUIREMENT.
4. After getting PAN number for your mother, apply for and get the BONDS in the combined names of YOUR MOTHER, YOUR SELF AND YOUR BROTHER.
5. Just because the amount has come through cheque, does not mean it is tax free. Therefore you have to follow steps 1 to 4 above to avoid Income Tax problem.
