Making ltcg of rs.2 crore tax free through gift.

This query is : Resolved

Bharat (Querist)
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05 February 2019 I own a piece of land for 10 years and want to gift 3/4th share of the land to be distributed equally among my 3 adult children.

Post gifting the land (through a gift deed on which applicable stamp duty and registration fee will be paid) in February 2019, I along with my three children will equally have 1/4th share on the land.

Now, immediately after gifting the land, we all decide to sell this land for a total value of Rs.2 Crore such that each of us receive Rs.50 Lakh.

My query is if we can all individually invest the entire capital gain proceeds (50 Lakh per person X 4 less indexed cost of acquisition) in capital gain bonds for a period of five years under section 54EC to essentially make the entire LTCG from such sale tax free?

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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06 February 2019 Yes, u can do so. there is no such prohibition under Income Tax Act, 1961. Father can gift to his adult children on which no tax is payable as per sec 56 of the act.