capital gain tax
This query is : Resolved
26 September 2010
Dear All,
Could any one clarify my doubt:
Mrs X recd gold ornaments by way of inheritance i.e. after the death of her mother in law. The said ornaments were sold susequently. whether she is liable for any gain tax? What would be the position if after the death of m.in law her entire ornaments were sold and the cheque was given directly in favour of each daughter in law as per mutual arrangement? (Cheque could not be given in of m.i.law as she is no more)
Could any one clarify my doubt:
Mrs X recd gold ornaments by way of inheritance i.e. after the death of her mother in law. The said ornaments were sold susequently. whether she is liable for any gain tax? What would be the position if after the death of m.in law her entire ornaments were sold and the cheque was given directly in favour of each daughter in law as per mutual arrangement? (Cheque could not be given in of m.i.law as she is no more)
27 September 2010
Hi Hitesh,
Mrs.X has to pay capital gains tax.
Cost of acquisition of ornaments will be
(a) Cost to mother-in-law OR
(b) Market value as on 1-4-1981, if ornaments are purchased before 1981.
Even if the ornaments are sold and cheque is given to them, then also Mrs.X is liable to capital gains tax.
Cheque may be given by solicitor on behalf of the deceased person.
Mrs.X has to pay capital gains tax.
Cost of acquisition of ornaments will be
(a) Cost to mother-in-law OR
(b) Market value as on 1-4-1981, if ornaments are purchased before 1981.
Even if the ornaments are sold and cheque is given to them, then also Mrs.X is liable to capital gains tax.
Cheque may be given by solicitor on behalf of the deceased person.
27 September 2010
many thanks. I was under impression that when money is recd and not the ornaments, there may not be capital gain tax.
27 September 2010
I agree with Mr.Vinay Gandhi. However you have posed two questions on the issue, which need to be addressed. You have stated that Mrs.x has inherited. Inheritance is under stood to be the result of any will or normal succession. If it were to be by way of succession,then what about the rights of he other daughters in law in the family. Is Mrs. X the lone successor according to will. If all the women have equal rights then by virtue of proviso to section 6 of the Hindu succession Act, the gain would fall pro rata on all the ladies in which case, each one of hem will have o pay tax according to their share. If the capital gains is their only income and is less than the taxable minimum, there is no need to pay any tax at all. Please frame your question correctly so that an accurate or proximately nearer viw could be rendered.
27 September 2010
Dear Mr.V. Srinivas,
Thanks for your reply. The exact position is under:
3 daughters in law are entitled for the ornamnets of mother in law after her death as per family arrangements. None has recd the ornaments as such. The ornaments were sold after 3/4 months of the death of Mother in law. Each one recd. the cheque from the jeweller with full details like weight, reduction for impurities etc. Whether it will be taken as receipt of ornaments or receipt of money by way of will? If it is taken as receipt of ornaments then subsequent sale will of ornaments attract capital gain tax. If it is taken as receipt of money it would not attract capital gain tax. Plz.inform what I think is correct? Can we take view that it is receipt of money?
Thanks for your reply. The exact position is under:
3 daughters in law are entitled for the ornamnets of mother in law after her death as per family arrangements. None has recd the ornaments as such. The ornaments were sold after 3/4 months of the death of Mother in law. Each one recd. the cheque from the jeweller with full details like weight, reduction for impurities etc. Whether it will be taken as receipt of ornaments or receipt of money by way of will? If it is taken as receipt of ornaments then subsequent sale will of ornaments attract capital gain tax. If it is taken as receipt of money it would not attract capital gain tax. Plz.inform what I think is correct? Can we take view that it is receipt of money?
28 September 2010
Mr.Hitesh,
No matter whether the daughters in law had received the property in the form of ornaments or cash, it is one obtained on inheritance. Hence it cannot be regarded as a sale, much less subjected to capital gains tax, as it is a mere distribution amongst the legal heirs/beneficiaries who are legally entitled to such benefits.
No matter whether the daughters in law had received the property in the form of ornaments or cash, it is one obtained on inheritance. Hence it cannot be regarded as a sale, much less subjected to capital gains tax, as it is a mere distribution amongst the legal heirs/beneficiaries who are legally entitled to such benefits.
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