Dear Guru prasad,
On sale of a property (Assuming to be a capital asset as defined in Income tax Act for the purpose of taxability, since you have not mentioned it clearly), you are liable to pay Long term Capital gains tax, which is chargeable at 20% on the difference amount of sale proceeds after incurring expenses towards selling the property as a deduction and the cost price at which you have acquired by adjusting it to cost inflation index as published in the Act.
So in your case you might have an exact sales figure, might not be the cost of the property since you acquired it through inheritance/succession. For these kind of cases, we have to refer sec. 49(1) of the Act, which says as below….
S. 49 Cost with reference to certain modes of acquisition.
1) 3 ] Where the capital asset became the property of the assessee-
(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;
(ii) under a gift or will;
3. Inserted by the Finance (No. 2) Act, 1967, w. e. f. 1- 4- 1967.
(iii) (a) by succession, inheritance or devolution, or
(b) 1 on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 987, or]
(c) on any distribution of assets on the liquidation of a company, or
(d) under a transfer to a revocable or an irrevocable trust, or
(e) under any such transfer as is referred to in clause (iV) 2 or clause (V)] 3 or clause (Vi)] 4 or clause (via)] of section 47;
(iv) 5 such assessee being a Hindu undivided family, by the mode referred to in sub- section (2) of section 64 at any time after the 31st day of December, 1969 ,] the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. 6 Explanation.- In this 7 sub- section] the expression" previous owner of the property" in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) 8 or clause (iv)] of this 9 sub- section].]
So, based on the above citation, you have to find out the original cost to your grandfather and the difference between the sale price is chargeable at 20% after following the methodology of calculation as prescribed in the Act.
Hence you need to pay Capital gains tax and a tax planning would have been investing in REC bonds or such other specifically notified bonds to claim exemption and you would have almost same rate of interest rather investing in FD’s.
CAclubindia
