Inheritance of property
siddhartha kumar
(Querist) 10 August 2011
This query is : Resolved
Dear Advisers,
I have the following query:
My father will be getting money out of the property (plot) sold. The said property is his late father's self acquired.
My question is:
1.)How much percentage of tax he has to pay and under what section ?
2.)In order to save the tax, what steps can be taken ?
Plse Advise.
M V Gupta
(Expert) 12 August 2011
Your father will have to pay capital gains tax if the sale price is more than the indexed cost of acquisition. The cap gains tax is at the flat rate of 20% of the gains made. Pl see the instructions enclosed to the IT return form to ascertain the cap. gains.
siddhartha kumar
(Querist) 13 August 2011
Thank You Mr. M V Gupta for the reply.
But i was told by some body that if i , i.e., my father invest the complete amount inherited from the sale of property of his father's in another property for a minimum of three years and construct that very property within the stipulated three years with electricity and water connections my father will be exempted from the tax net. Alternatively we also can put that amount in some special bonds for a minimum of 3 years in any nationalized bank. Plse advise if i am right or wrong.
soumitra basu
(Expert) 18 August 2011
You are partially right.
Your father can invest the whole sales proceeds either 1 year before the date of transfer or 2 years after the date of transfer in new residential house property.
Or,
he can compute his capital gain by deducting the indexed cost of acquisition from the sales proceeds. The capital gain can be invested in specified bond within six month from the date of sale.
Thus, he can save the capital gain tax.
siddhartha kumar
(Querist) 22 August 2011
but he already has residential property under his name, will the law of tax apply same as u said.Also what exactly is indexing.
