Joint property if sold for 40L purchased at 20L in 2008
1) will attract capital gain tax(20%) both Mr& Mrs separately on 10L each or together. How much capital gain to be shown in IT return if both are filing separately.
2) Can husband n wife use proceeds to purchase flat on their son's name and yet save tax on 10L each since returned filed separately instead of 20L together.
3) To invest in Capital bonds: Both Mr Mrs should invest 10L each separately or together for 3yrs to save CGT.
jeevan Patil
Dear Mr.Jeevan Patil,
You say that the property was purhased at s. 20 L in the year 2008. I take it that the property was purchased after 1.4.2008 but before 31.3.2009. (Any difference in the period of purchase will have slight difference in the calculation of actual capital gains). It is not clear whether that Rs 20 lakhs includes the amount of Stamp Duty paid at the time of purchase of the property. If not included, then that can also be included in the cost of purchase and then the indexed cost of acquisition can be worked out accordingly.
In the year 2008-2009 the Index applicable was 137. The Cost of Acquisition Index for 2017-18 is 272.
Therefore the Indexed cost of acquisition of the property (which was acquired in the Financial Year 2008-09 at Rs. 20 lakhs) in the year 2017-18 would be worked out as under:
2000000 x 272/137 = Rs. 3970803.
Therefore the amount of Capital Gains is Rs. 40 lakhs minus Rs. 3970803 = Rs. 29197/-
On this amount of Rs. 29197/- 20% capital gains tax Rs. 5840/- is payable.
This can be avoided by depositing Rs. 30000/- in NHAI Bond for 3 years (if deposited sufficiently before 31.3.2018) otherwise it will be 5 years lock in period. The NHAI Bond gives 5.25% interest. Even though the interest rate is low, still it will be beneficial after the prescribed period of 3 or 5 years compared to paying the CAPITAL Gains Tax.
As regards, whether wife and husband have to pay 50% each, it all will depend upon several factors like -
(i) whether the property was earlier rented out and if so how the rent income was shown in a single person (husband or wife) hand or in both the hands 50% each.
(ii) How the sale consideration is being received (i) by single party or 50% each by wife and husband.
If the practice was to receive the rental income 50% each, or if the consideration is received by husband and wife at 50% each, then the capital gain is to be paid by each party and not by one party.
As the amount of Capital gain is only Rs. 29197/- I dont think that one will be able to buy any new property with that small amount. I think you were thinking that Rs. 20 lakhs (Rs. 40 lakhs minus Rs. 20 lakhs) would be the capital gain and therefore your query for purchasing the property. From the calculation shown above, you will realise that the capital gain amount is very less approximately Rs. 30000 thousand only.
Further it is to be clarified that the new property has to be purchased in the name of the individual person who gained the capital gain and not in anybody else's name.
You may call me on my mobile 9868211477 for any further clarification.
