Capital gains

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Shams (Querist)
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27 July 2011 My mother sold her flat 3 years ago and invested the proceeds in a capital gains account scheme B (i.e. Term Deposit for 3 years) with a nationalized bank to save on the Long Term Capital Gains tax. The account completed the 3 years tenure in December 2010. She has paid the tax on the interest gained as per the appropiate taxation slab. She will not be purchasing a new property and instead has disbursed the funds to my brother and me. Will my mother be taxed on the principal amount deposited in the Capital gains scheme as she has not purchased a new property? Will me and my brother be taxed on the amount disbursed / gifted to us and is it mandatory for us to purchase a property with this amount?

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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28 July 2011 The proceeds that you invested in gains account scheme B were meant for purchase of house property and not investment in FD.You have defaulted in the provisions of sec. 54 and shall be liable to pay income tax on the CAPITAL GAINS so made.The liability shall be on your mother .

Anuj
+91-9810106211
femaquery@gmail.com

Shams

Shams (Querist)
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28 July 2011 Thank you for the update and prompt response. If I now purchase a flat from the proceeds with my mother as a joint holder for a price above the capital gains tax amount will she stil be liable to pay the tax?

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CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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28 July 2011 Yes since the time for purchase of property has elapsed.(as per facts stated by you)

Anuj