Income tax on parental property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2014 Dear Sir,

i have a parental plot which i want to sell and want to buy agriculture land from that money, Is it taxable?

That plot is parental comes from VIRASAT, Generation to Generation

and can i deposited cheque of Rs. 01 Core in my saving account? I Have not PANCARD. and never file ITR. I have not taxable income.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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23 August 2014 if that plot is no agriculture then u will not get exemption n pan is must

Querist : Anonymous

Querist : Anonymous (Querist)

01 September 2014 Dear Sir,
this plot is in Munciple corporation area

can i deposited single cheque of 01 Core in saving a/c. and i don't have a pan card and further i have to issue cheque of 01 Core to party from i purchased agriculture land

When i deposited 01 Core in single time can BANK & Income TAx ask query on this

Should i take cheuqe in different name and deposited in different accounts

Should i take 10 cheque of Rs. 10,00,000.00
and deposited in different different accounts.

Kindly Guide

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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31 July 2024 Here’s a detailed breakdown of the considerations for your situation:

### **1. **Tax Implications on Sale of Parental Property**

**Sale of Parental Property:**
- **Capital Gains Tax:** When you sell a property, you need to calculate the capital gains arising from the sale. Since the plot is inherited (from *virasat*), the cost of acquisition is considered as the cost at which the property was inherited. The capital gains are calculated as the difference between the sale price and the indexed cost of acquisition.

**Exemption for Agriculture Land:**
- **Section 54B:** If you sell a plot and use the proceeds to purchase agricultural land, you may be eligible for tax exemption under Section 54B of the Income Tax Act. The new agricultural land should be purchased within two years of the sale, and the land should be used for agricultural purposes.

### **2. **Depositing Large Amounts**

**PAN Requirement:**
- **PAN Card:** The Income Tax Act requires PAN for transactions involving large amounts of money. Though you haven’t filed ITR or have taxable income, the requirement for PAN for large transactions is a regulatory measure to track high-value transactions.

**Depositing ₹1 Crore:**
- **Bank Regulations:** Banks are required to report large cash deposits or large transactions to the Income Tax Department under the guidelines for reporting of high-value transactions. This applies even if you do not have a PAN card.

**Risk of Queries:**
- **Income Tax Queries:** Large deposits can attract scrutiny from the Income Tax Department, especially if you do not have a PAN card or are not a regular taxpayer. Deposits above ₹10 lakhs in a savings account in a financial year need to be reported by the bank.

**Splitting Deposits:**
- **Legal Compliance:** It is not advisable to split deposits into smaller amounts to evade reporting requirements. This could be considered as an attempt to evade regulatory norms and may attract penalties or legal issues.

### **3. **Steps to Consider**

1. **Obtain a PAN Card:** It’s advisable to apply for a PAN card if you are engaging in high-value transactions. PAN helps in smooth processing and compliance with tax regulations.

2. **Report the Sale:** Ensure that you report the sale of the property correctly in your income tax return. Even if you do not have taxable income, reporting the transaction helps in maintaining transparency.

3. **Consult a Tax Professional:** For specific guidance on tax exemptions and correct reporting, consult a tax professional. They can help you navigate the complexities and ensure compliance with all applicable laws.

4. **Bank Deposits:**
- **Single Deposit:** You can deposit ₹1 crore in a single transaction, but be prepared for potential queries from the bank and the Income Tax Department.
- **Documentation:** Ensure you have proper documentation for the source of funds and the transaction to address any queries that may arise.

5. **Issuing Cheques:** If you need to issue a cheque for the purchase of agricultural land, it should be done from your account where the sale proceeds are deposited. Ensure proper documentation of the transaction.

### **Summary**

- **Capital Gains Tax:** Sale of parental plot is taxable; exemption may apply if using proceeds to buy agricultural land.
- **Deposits:** Large deposits should be reported; having a PAN card is advisable.
- **Compliance:** Ensure proper reporting and consult a tax professional for guidance.

Handling large transactions with proper documentation and compliance will help avoid potential issues with the tax authorities and ensure smooth processing of your financial transactions.