Capital gains OR
This query is : Resolved
05 June 2024
I received money along with my bothers sisters and uncles when property inherited by us from my paternal grandfather, was sold ten years before. my 1/12th share. (2 uncles and 2 siblings and mother). Rs.10 Lac was not given by the builder then and held back as security until premises made vacant by tenants. But builder lapsed on the agreement for ten years for lack of money . Now after raising a legal notice by us, he has agreed to restart the project and pay Rs. 10 lac withheld. I had disclosed the full amount before ten years in my IT return as Capital Gains. I had put the indexed amount under NHAI bonds for 5 years. This amount then included the INR Ten lac receivable now. So Should I now re-disclose this INR 10 Lac amount in FY 24-25 ?. Is it necessary?
In the meantime I lost my mother 2 years back. so her share of INR 10 Lac will be divided among her 3 children. So I will receive INR 10 lac/ 3 from my mothers bank account ,which is operable by my sister. how to treat this money in my return next year?
The builder will enter into a agreement now to give interest on INR 10 Lac for ten years (as per previous agreement) in the form of space of 100 sft. but again convert this 100 sft x Rate per square foot to INR and pay at the time of plinth may be 1.5 to 2 years hence to me (and all others as well) . How to treat this substantial money to tax then?
How to save tax on this amount receivable after 1.5 to 2 years. can it be treated as LTCG and amount diverted to NHAI bonds under sec 54c. Or can it be treated as hardship amount. Which is the safe way w.o. tax hurdle. or any other way. please let me know fast as we have to enter in to a MOU with Builder in coming few days.
In the meantime I lost my mother 2 years back. so her share of INR 10 Lac will be divided among her 3 children. So I will receive INR 10 lac/ 3 from my mothers bank account ,which is operable by my sister. how to treat this money in my return next year?
The builder will enter into a agreement now to give interest on INR 10 Lac for ten years (as per previous agreement) in the form of space of 100 sft. but again convert this 100 sft x Rate per square foot to INR and pay at the time of plinth may be 1.5 to 2 years hence to me (and all others as well) . How to treat this substantial money to tax then?
How to save tax on this amount receivable after 1.5 to 2 years. can it be treated as LTCG and amount diverted to NHAI bonds under sec 54c. Or can it be treated as hardship amount. Which is the safe way w.o. tax hurdle. or any other way. please let me know fast as we have to enter in to a MOU with Builder in coming few days.
06 July 2024
Given the complexity of your situation involving inherited property, pending payments, and future agreements with the builder, it's crucial to approach these tax implications carefully. Here’s a breakdown of how you could consider handling these scenarios from a tax perspective:
### Treatment of INR 10 Lakh Receivable Now:
1. **Re-disclosure in FY 2024-25:**
- Since the INR 10 lakh was previously disclosed as part of your capital gains in your IT return, and now it is receivable due to the builder restarting the project, you should re-evaluate whether it needs to be re-disclosed.
- Generally, if you have already disclosed the entire transaction correctly earlier (including the INR 10 lakh), and the pending amount is just a delayed payment from that transaction, you might not need to re-disclose it separately unless there’s a significant change in circumstances or the nature of the income.
2. **Treatment of Mother's Share:**
- If your mother's share of INR 10 lakh is distributed among her three children, including you, and it's being managed by your sister, the income tax implications would typically be for the recipients when they actually receive the funds.
- The INR 10 lakh received from your mother's share would be taxable in the hands of the recipients (you and your siblings) in the year you actually receive it.
### Treatment of Future Payments from Builder:
1. **Interest on INR 10 Lakh:**
- The builder's agreement to pay interest in the form of space (100 sq ft) and then convert it to INR later needs careful consideration.
- The converted amount should be treated as income in the year you actually receive it, whether it's in 1.5 to 2 years.
- You need to ensure proper documentation of this arrangement to reflect the actual income received.
2. **Tax Planning for Future Payments:**
- If the amount received can be treated as part of long-term capital gains (LTCG) from the original property sale, you might explore options under Section 54C (investment in NHAI bonds) to save on tax.
- Consult with a tax advisor to understand if this scenario qualifies under Section 54C and the conditions that need to be met for the reinvestment benefit.
- Consider other tax-efficient investment avenues if applicable, based on your financial goals and the specific tax laws applicable to your situation.
### Conclusion:
- **Documentation:** Ensure all agreements with the builder are properly documented to reflect the terms of payment and interest.
- **Tax Advisor:** Given the complexity of inherited property, delayed payments, and future agreements, it’s advisable to consult with a tax advisor or chartered accountant who can provide personalized advice based on the latest tax regulations and your specific circumstances.
- **Compliance:** Stay updated on any changes in tax laws that may affect your situation to ensure compliance and optimize tax efficiency.
By taking these steps and seeking professional advice, you can navigate the tax implications effectively and make informed decisions regarding your receivable amounts and future investments.
### Treatment of INR 10 Lakh Receivable Now:
1. **Re-disclosure in FY 2024-25:**
- Since the INR 10 lakh was previously disclosed as part of your capital gains in your IT return, and now it is receivable due to the builder restarting the project, you should re-evaluate whether it needs to be re-disclosed.
- Generally, if you have already disclosed the entire transaction correctly earlier (including the INR 10 lakh), and the pending amount is just a delayed payment from that transaction, you might not need to re-disclose it separately unless there’s a significant change in circumstances or the nature of the income.
2. **Treatment of Mother's Share:**
- If your mother's share of INR 10 lakh is distributed among her three children, including you, and it's being managed by your sister, the income tax implications would typically be for the recipients when they actually receive the funds.
- The INR 10 lakh received from your mother's share would be taxable in the hands of the recipients (you and your siblings) in the year you actually receive it.
### Treatment of Future Payments from Builder:
1. **Interest on INR 10 Lakh:**
- The builder's agreement to pay interest in the form of space (100 sq ft) and then convert it to INR later needs careful consideration.
- The converted amount should be treated as income in the year you actually receive it, whether it's in 1.5 to 2 years.
- You need to ensure proper documentation of this arrangement to reflect the actual income received.
2. **Tax Planning for Future Payments:**
- If the amount received can be treated as part of long-term capital gains (LTCG) from the original property sale, you might explore options under Section 54C (investment in NHAI bonds) to save on tax.
- Consult with a tax advisor to understand if this scenario qualifies under Section 54C and the conditions that need to be met for the reinvestment benefit.
- Consider other tax-efficient investment avenues if applicable, based on your financial goals and the specific tax laws applicable to your situation.
### Conclusion:
- **Documentation:** Ensure all agreements with the builder are properly documented to reflect the terms of payment and interest.
- **Tax Advisor:** Given the complexity of inherited property, delayed payments, and future agreements, it’s advisable to consult with a tax advisor or chartered accountant who can provide personalized advice based on the latest tax regulations and your specific circumstances.
- **Compliance:** Stay updated on any changes in tax laws that may affect your situation to ensure compliance and optimize tax efficiency.
By taking these steps and seeking professional advice, you can navigate the tax implications effectively and make informed decisions regarding your receivable amounts and future investments.
07 July 2024
Thank you very much.
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