Capital gains tax
sneh agarwal
(Querist) 13 August 2014
This query is : Resolved
sir, my mother was the sole owner of our house. we sold the house about two and a half years ago. my mother did have a bank account at that time. my mother is illiterate and prints her thumb instead of putting signatures. also she is paralyzed and it is not that easy to take her to a government office/bank to put her thumb impression. so we asked the buyer of the house to transfer money directly into my account. he deposited cash (the entire cost of the house) directly into my account. no gift deed (a gift of cash from my mother to me) was executed. at that time i did not know anything about capital gains tax. two years later i came to know about capital gains tax from a friend. he told me that such a transfer of cash directly into my bank account without a gift deed was illegal.
was he right? if yes, how can i convert this transfer into a legal one. is it possible to execute a gift deed now two and a half years later?
i used three-fourths of the money to buy a flat( the flat is under construction right now). can i pay capital gains tax on behalf of my mother six months later (three years, since we sold the house, will be completed six months later)?
if i can pay capital gains tax will i be exempted from paying tax on the three-fourth amount that i used to buy a house within three years from selling our old house.
how can i convince the authorities that the money deposited in my account was actually obtained by selling the house owned by my mother?
Anirudh
(Expert) 13 August 2014
Please indicate whether you or your mother have received any Notice from the Income Tax Department?
Rajendra K Goyal
(Expert) 14 August 2014
Consult a local tax consultant and discuss in detail.
ajay sethi
(Expert) 14 August 2014
answer query raised by MR anirudh
sneh agarwal
(Querist) 14 August 2014
sir, we have not yet received any notice from the income tax department. but three years have not yet passed since the house was sold.
Anirudh
(Expert) 14 August 2014
Dear Sneh,
Whether the sale deed was executed by your mother?
Whether the sale deed was duly registered with the Sub-Registrar's office.
Whether in the sale deed, it has been mentioned that the consideration has been paid by cash by the buyer?
sneh agarwal
(Querist) 15 August 2014
sir, answer to all your questions is: yes. sale deed was executed by my mother, it was duly registered and it was mentioned that consideration has been paid by cash.
Anirudh
(Expert) 17 August 2014
Dear Sneh,
In terms of Section 54 of the I.T.Act, the quantum of 'capital gain' (i.e. sale consideration minus indexed cost of acquisition) is entitled for exemption from capital gains tax provided -
(1) the seller has purchased a new property 1 year prior to the date of sale of the property and the value of the new property is equivalent to or more than the amount of capital gain; or
(2) utilised the capital gain in purchasing a new property within two years from the date of sale.
In your case, it is not clear, whether you booked the flat before 31st July of the following year in which the property was sold. (e.g. if property was sold on or before 31.3.2014, then the new flat ought to have been booked for and paid (at least to the extent of the 'capital gain') before 31.7.2014.
Similarly, if the property had been sold on or before 31.3.2013, the flat ought to have been booked for and paid (at least to the extent of the 'capital gain') before 31.7.2013.
Depending upon the fact situation, your mother's income tax liabilities towards capital gain will get decided.
It is not clear in which town / city you reside.
T. Kalaiselvan, Advocate
(Expert) 19 August 2014
Besides expert Mr. Anirudh's valuable and agreeable opinion, you still have any doubt, you may clarify the same from a local tax consultant or an auditor.
