Is Capital Gain exemption available for Property acquired by Giftdeed

A complex scenario involving gifted properties and capital gain tax exemptions! Key Points 1. *Mother gifts property to Son*: The son is not liable to pay capital gain tax at this stage, as there is no sale consideration. 2. *Son gifts 90% share to his wife*: This is considered a transfer, but since it's a gift between spouses, there is no capital gain tax implication. 3. *Sale of property*: When the property is sold, the capital gain tax exemption rules will apply. Capital Gain Tax Exemption To qualify for capital gain tax exemption, the following conditions must be met: 1. *Reinvestment in a new residential property*: The entire sale proceeds must be reinvested in a new residential property within 2 years from the date of sale. 2. *Investment in Tax Bonds*: Alternatively, the capital gain can be invested in specified tax bonds (e.g., NHAI, REC) within 6 months from the date of sale. Gifted Property Considerations Since the property was initially gifted by the mother to the son, the son's cost of acquisition will be considered as the cost of acquisition of the mother (i.e., the original purchase price). Tax Implications When the property is sold, the capital gain will be calculated based on the sale price and the indexed cost of acquisition (i.e., the original purchase price adjusted for inflation). The entire capital gain will be taxable, but the exemption rules mentioned above can be applied to reduce or eliminate the tax liability. Conclusion To summarize: - The son's cost of acquisition will be considered as the cost of acquisition of the mother. - The entire capital gain will be taxable, but exemption rules can be applied. - Reinvestment in a new residential property or investment in tax bonds can provide exemption from capital gain tax. It is recommended to consult a tax professional or chartered accountant to ensure accurate calculations and compliance with tax regulations.

Re investment is applicable.

Thanks for reply.

Means if i reinvest the  a part amount of capital gain of gift deed aquired property then that amount won't atttract any tax while rest uninvested amount would require capital gain tax payment.

for example if Buy price was 10 lakhs and Sale price is 1.10 cr , Ltcg would be 1 cr without indexation.

if i reinvest 40 lakhs only in new property than Ltcg tax payable by me on 60 lakhs would  be 7.5 lakhs ( @ 12.5% for non indexation) only instead of 12.5 lakhs on entire gain of 1 Cr.

Please let me know if it's right

Thanks