14 July 2012
hi all, My mother is a home maker and wil be gettin a lump sum amount from the ancestral property of her mother. wil it be taxed in my mother's hand for the amt recd??? also state if the amount wil taxed if it is received in the form of gift from her mother. plz advice thank u
14 July 2012
Please Read this case:- My father has received 20 lakh from the sale of ancestral property. Will this amount be taxed? If he gifts it to family members will there be any exemption on tax? Will the family members have to pay tax on the gift? You will have to first compute the capital gains arising from this sale. For computing capital gains, you will have to deduct the indexed cost of acquisition of the property by applying an indexation factor to the cost of acquisition. The cost of acquisition of the property will be the cost to the previous owner. If the previous owner acquired the property before April 1, 1981, then you can consider the fair market value of the property as on April 1, 1981 as its cost of acquisition. You can hire services of a registered valuer to obtain the fair market value. Income tax is payable @ 20.6% on the amount of long-term capital gains. However, if your father does not have any other income, then he can deduct the amount of basic exemption applicable to him from the amount of capital gain and pay income tax at 20.6% only on the balance income. Further, he can make investment in capital gains tax saving bonds in accordance with the provisions of Section 54EC or investment in a house in accordance with the provisions of Section 54 to claim tax exemption on the capital gains. He will not be eligible to claim tax exemption by distributing the sale proceeds among the family members as gift. The amount of gift received will be exempt from tax in the hands of family members.
CAclubindia
