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Gift deed value as Cost of Acquisition

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Kishore Nuthalapati

Accountant for multiple small entities

154 Points Posted on 03 July 2024

Hi Sir/Madam

A property(land) is transfered as gift to her daughter.

She sold the gifted property in the FY 2023-24

The property is sold for 10 lacs
as per gift deed value adopted(market value) for Stamp duty is 6 lacs

Can I take 6 lacs as Cost of Acquisition as per gift deed.

Please advise

Thanks in advance

Replies (2)

Quick Summary

When a property is received as a gift and subsequently sold, the cost of acquisition for capital gains tax purposes is not the value stated in the gift deed. Instead, it's the original cost incurred by the person who gifted the property. This includes any improvements made. The holding period also includes the time the previous owner possessed the asset, and indexation benefits can be claimed from the original owner's purchase year. If the original owner acquired the property before April 1, 2001, the Fair Market Value as of that date is used, capped by the stamp duty value then.

CA Anoop Kumar Sharma

Accounts Manager

1470 Points Posted on 03 July 2024

NO, When a property is received as a gift, the cost of acquisition for the purpose of calculating capital gains is considered to be the cost at which the previous owner (the person who gifted the property) acquired it, not the market value or stamp duty value mentioned in the gift deed.

Aashok Kumar Sharma

Finance/Compliance Consultant

75664 Points Posted on 07 November 2026

Use the previous owner's cost, not the gift deed value:

• Sec 49(1)(ii): for an asset received by gift, cost of acquisition = cost to the previous owner (the parent), plus improvements. The value in the gift deed (or stamp duty value) is irrelevant for cost.

• Holding period includes the previous owner's holding (Sec 2(42A) Explanation 1(b)). Indexation, if opted (land bought before 23 July 2024, resident individual), runs from the previous owner's acquisition year (Bombay HC in Manjula Shah, applied widely).

• If the previous owner acquired before 1 April 2001, use FMV as on 1 April 2001 (capped at the stamp duty value as of that date).

• Stamp duty paid by the daughter on the gift deed: arguably part of cost (expenditure on acquisition). Commonly added.