Lowering tax liability in property sale
This query is : Resolved
14 May 2015
My father who is 78years old wants to sell his property built in 1986 for 2crores. He is not getting buyers who are ready to pay 100% in white. Most of them are ok with only 60-70% white and rest in cash.
What are his options so that his tax liability is also less at the same time he can sell his property.
Incase he takes 30-40% cash and deposits them in various bank accounts will it mitigate tax or are there any better ways to utilise that cash.
If part of the money received is given to his spouse and children then what are their tax liabilities.
He was working abroad and has not filed IT returns so far in India. He has a PAN number.
What are his options so that his tax liability is also less at the same time he can sell his property.
Incase he takes 30-40% cash and deposits them in various bank accounts will it mitigate tax or are there any better ways to utilise that cash.
If part of the money received is given to his spouse and children then what are their tax liabilities.
He was working abroad and has not filed IT returns so far in India. He has a PAN number.
20 May 2015
If the property is in India he is required to pay tax on capital gains even if he is non resident. Even if he wants to sell the property for Rs. 2 crores the capital gains will be calculated taking sale consideration at registrar's stamp duty value u/s 50C. It may be more or less than Rs. 2 crores. Therefore sale consideration has to be equal to registrar's stamp duty value. Further due to amendment in section 269SS which will be applicable from 01.06.2015 the maximum amount which can be obtained in cash is less than Rs. 20,000/-. If any cash of Rs. 20000/- or more is taken than he will incur penalty equal to the amount received in cash. If part of the money is given to his spouse and that money is invested somewhere by spouse and she earns any money out of it than that income will be clubbed in his hands only.
Message likes :
1 times
20 May 2015
Thanks Goyalji.
Im summarising my understanding.
1. Cash beyond Rs20000 cannot be taken, hence ideally the deal has to be in white only.
2. Money from sale can be split and investment can be made in spouses name.
3. Capital gain tax will be based on sale value mentioned in stamp paper.
4. If Lesser value is shown in stamp paper then capital gain tax will be lesser.
Sir my concern is if sale consideration shown in stamp paper is 50 lakhs. and actual transaction value is 2cr, then what are the ways to manage remaining 1.5cr with least tax liability.
Im summarising my understanding.
1. Cash beyond Rs20000 cannot be taken, hence ideally the deal has to be in white only.
2. Money from sale can be split and investment can be made in spouses name.
3. Capital gain tax will be based on sale value mentioned in stamp paper.
4. If Lesser value is shown in stamp paper then capital gain tax will be lesser.
Sir my concern is if sale consideration shown in stamp paper is 50 lakhs. and actual transaction value is 2cr, then what are the ways to manage remaining 1.5cr with least tax liability.
20 May 2015
1. Cash of Rs. 20,000/- or more cannot be taken.
2. On sale of property net gains will be calculated by subtracting the indexed cost of acquisition from sale consideration which will be the value of the property adopted for stamp duty purpose by registrar.
3. Irrespective of actual sale consideration the sale consideration will be registrar's value i.e. the value of the property determined by registrar when you get the sale deed registered.
I hope I am now fully clear.
2. On sale of property net gains will be calculated by subtracting the indexed cost of acquisition from sale consideration which will be the value of the property adopted for stamp duty purpose by registrar.
3. Irrespective of actual sale consideration the sale consideration will be registrar's value i.e. the value of the property determined by registrar when you get the sale deed registered.
I hope I am now fully clear.
20 May 2015
If capital gains tax is to be saved than options are available under sections 54, 54F and 54EC depending upon the nature of property.
Message likes :
1 times
20 May 2015
The property is an independent house. Im aware that whatever sale consideration is shown in stamp paper that amount can be put in a capital gains account and utilised to buy/construct one property.
So if the transaction is 2cr and I have shown only 50L (based on govt's fair value of land) as the sale consideration in stamp paper...sir my concern is then what are the ways to manage remaining 1.5cr with least tax liability.
option1-Will there be an issue with bank if 2Cr is deposited in capital gains account even if sale consideration in stamp paper is only 50L. Im guessing bank will have question on source of income of balance 1.5cr
option2- can remaining 1.5cr be split and deposited in different bank accounts of father and mother...will that incur tax liability?
There can be only one LTCG account isnt it?
So if the transaction is 2cr and I have shown only 50L (based on govt's fair value of land) as the sale consideration in stamp paper...sir my concern is then what are the ways to manage remaining 1.5cr with least tax liability.
option1-Will there be an issue with bank if 2Cr is deposited in capital gains account even if sale consideration in stamp paper is only 50L. Im guessing bank will have question on source of income of balance 1.5cr
option2- can remaining 1.5cr be split and deposited in different bank accounts of father and mother...will that incur tax liability?
There can be only one LTCG account isnt it?
21 May 2015
Before making any estimates it will be better to get information on registrar's value for stamp duty purposes. What I mean to say is that sale consideration will be taken to be the value which registrar of stamp duty determines while registering the sale deed. And capital gains will be calculated taking that sale consideration.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Tax on capital gains revoked us 54f
- Refund of AY 22-23
- Should I include march foreign salary received in April in my income for FY 2023-24?
- HSN Details in IFF/GSTR-1 & in GSTR 9
- TDR receipts for agreement holder
- Inventory of finished goods
- Clarification on Documentation of Paid-Up Capital Contribution by Directors
- Applicability of Ind As to associate of associate
- Disallowance of Section 43B(h) to sez units
- Sale of property furniture sale
- GSTR9C Turnover
- Vivad se vishwas scheme 2024 new
- MODEL FILLED AUDIT REPORT FOR TRUSTS IN FORM 10B
- 115TD on cancellation of 12A 80G Registration
- MIS MATCH OF INVOICE NUMBER
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- CASE INTIMATION OF LIABILITY UNDER SECTION 73(5)(Rule 142(1A)
Trending Online Classes
CAclubindia
