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Capital gains to gift a property and capital gains to sellit

Raj (xcvcx) (33 Points)

19 April 2012

Hello All,

I had a doubt on the below.

Brother gift a a plot to sister.

So, Do brother or sister need to pay any tax for the above transaction, if so, can i know how much ?

Now if sister sells this gift property (plot) immediately, what is the percentage of capital gains tax. It is a long term capital gains.

Is there any legal way to escape the above two taxes.

Thanks in Advance,

Raj

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6 Replies

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 19 April 2012

Hi,

If Brother gives GIft to his Sister, it will be exempted u/s 56(2)(vii) of the Income Tax Act since the sister is getting the land from her Relative.

As for the sister, if she sells the same plot of land received as gift,

She would have to pay Capital Gains Tax @ 20%

The Cost of Acquisition would be price at which her brother bought the plot (As indexed)

If you want to escape tax liability, invest the capital gains amount in residential house property or bonds so as to get exemption benefits of Sec 54.

Regards

Prateek

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Raj (xcvcx) (33 Points)
Replied 23 April 2012

Thanks for the reply. One more doubt. If the property is gifted to sister's husband instead of sister, still will it be exempted under income tax ?

Sumit Mahajan (manager) (26 Points)
Replied 01 May 2012

My father Mr. Sanjay, a Delhi govt serviceman became a member of delhi govt. society and subsequently purchased a plot of 250 yards in a society alloted by DDA. he constructed a house in the year 1981-82 at a cost of Rs 1.2 lakh.
In his will in which he divided the property in the names of his wife (my mother), his son Mr. Ashok (my elder brother) and me Ms. Sunita , (his daughter) equally.
He expired in 1991.

My mother in her will gave her share to both of us (my brother and me equally).
My mother expired in 2010.

Now,my brother and myself are the equal benefiataires of the same.

We do not wish to sell the property and at the same time I wish that my brother becomes the total owner of the property and I am ready to relinquish my share to him.

My brother wants to give me in compensation a sum of Rs 50 Lakhs in cheques, in White form.

Kindly let me know if this sum is taxable to me or not, and if yes then how to save this tax ??

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 02 May 2012

@ sumitji/sunitaji,

Relinquishment of right towards an asset is also transfer within the meaning of capital gains. Hence, in your hands, when you have relinquished your part of the asset towards your brother, it wll taxable as long term capital gains.

You cansave tax by way of investment in REC or NHAI bonds u/s 54EC within 6 months from the date of relinquishment or you can invest in a house property (either through purchase or self - construction)

Regards

Prateek