Capital gain and income tax on land sale

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2013 1. I am 28 years old UP based person.

2. My Grandfather bought a land in 1968.

3. This land was purchased by my Father’s name who was minor (13 years) at that time.

4. My grandfather has 5 sons.

5. On this land a market was developed by grandfather in 1990s.

6. My father died in 2004 and as a natural heir this land is transferred to my name.

7. Now technically I am full owner of this property.

8. But as I know this property actually belongs to all 5 sons of my grandfather so I need to give them their share of 20% each and finally I will retain rest 20%.

how to redistribute this property?

• One way is, I sell them this property to my uncles free of cost. It will cost registration cost in Tehsil.

Now the question is, even if I sell it free of cost to them, will I be liable for any income tax, capital gain or any other tax??

• Is there any alternative way of doing it so that my liability could be reduced?

Thank you so much for your time and advice.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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30 May 2013 Factually you are right that you are the owner of 100% and as you have set your mind that you want to retain 20% and give balance 80% to your uncles then you have to adopt a different mode of transfer. If you prepare a sale deed even free of cost the provisions of Section 50C will attract and you will be liable for huge capital gains as the valuation will be treated as per market value on the date of execution of Sale deed.

Now, the alternative way is to prepare a Deed of family settlement which you have to get it drafted very nicely from an experienced CA or any other poerson who can do it at cost. If you require my help you can contact me at ssunderagarwal@gmail.com
This will not attract any tax and you can get the properties transferred by way of shares to the family members at a reasonable stamp duty.