income tax from sale of ancestors property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2011 dear sir,
i want to sale one property which is on the name of my father.
aprox market value of property should be 1 crore.
its in market place.
all documents are with my father.
my grand father given this property to him.
pls let me know how much tax my father has to pay after sale of this.
how i can save tax.
rgds

sai swaroop munaga

sai swaroop munaga (Expert)
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10 May 2011 Yes your father has to pay the tax. However the benefit of indexation can be availed.

To avail the tax saving, deposit in the same in capital gains a/c with SBI. The amount deposited should be utilised for purchasing new property in next three years.

If you want to avoid the tax, Share the sale proceeds among the family members (All the legal heirs of ancestral property) then all can get Some basic Exemption limit and with other tax savings, you can save good amount of tax

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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10 May 2011 If the property is ancestral, then first see whether it was bought before 1st April 1981 or after that. Most probably it will be before that only.

The computation shall be depending on the actual purchase price by your grandfather or the fair market value on 1.4.1981. The derived value shall be adjusted to Cost Inflation Index to arrive at Indexed Cost of Acquisition. Further it the property had any improvement costs incurred, such indexed cost shall also be allowed to be deducted from the sale proceeds. The indexed purchase price and the indexed improvement cost deducted from the net sale proceeds shall result into long term capital gain chargeable to tax. Tax @ 20% shall be levied on the same. However, if you invest the amount as specified under various sections of exemptions of 54 and other related sections, then you may not be required to pay tax now.

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Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2011 dear amol sir,
property's fair market value on 1.4.1981 was aprox 10 lacs.further property had improvement cost of aprox 5 lacs.
kindly give me your calculation of long term capital gain chargeble to tax.