Ltcg on sale of land

Tax queries 1553 views 5 replies

Abrar

Others

56 Points Joined January 2014

1) Original Buyer (A) (late husband of present owner/father of present owner) as mother and son both are now co-owners now) bought 4 Katha 10 Lecha land on 04 Sept 1981 for a consideration Amount : Rs 4000 .
2) On death (11May, 2009) of original buyer (A) land transferred to his legal heirs-wife (X) & son – (Y) on 21.5.2011.
3) X & Y Sold part of transferred land measuring 1 Katha 1 Lecha on 8 Jan 2014 for an amount Rs 12,60000. This amount paid by cash.
4) Both mother (senior citizen) (X) and son (Y) of the deceased are not taxable- below tax slab (less than 2 lakh income)

Questions
1) What will be the capital gain tax on this amount (12,60,000). Whether it will be short term or long term capital gain tax (will it be short term because they sold the land within 3 years from the time it was inherited or will it be long term since it is inherited property? If short term / long term how much will be the tax on X & Y?

2) For LTCG, can we calculate tax without indexation benefit? If we do not want to take advantage of indexation benefit (as indexation benefit will be low) then what will be the tax rate, and whether it will be added to my income and taxed according to slab or the LTCG will be taxed seperately at 10% wihtout indexation benefit?

Replies (5)

kanagaraj

CHARTERED ACCOUNTANT

793 Points Joined March 2009

it is only a LTCG, and the rate of tax is 20%+3% cess. without indexation is applicable only for securities transactions.

Mihir

Wealth Manager

5293 Points Joined December 2008

It will be long term capital gain. You will have to compute the cost of acquisition for 1 katha and 1 lecha of land as on the date of purchase and not on the date of transfer by inheritance. And even if their income is below taxable limit, this transaction will have to be disclosed. You may invest the long term capital gain either in another property or invest in bonds to save tax. Hope this sale has been effected by a valid stamped and registered sale deed since you have sold it for cash.

Abrar

Others

56 Points Joined January 2014

Originally posted by : Mihir
	It will be long term capital gain. You will have to compute the cost of acquisition for 1 katha and 1 lecha of land as on the date of purchase and not on the date of transfer by inheritance. And even if their income is below taxable limit, this transaction will have to be disclosed. You may invest the long term capital gain either in another property or invest in bonds to save tax. Hope this sale has been effected by a valid stamped and registered sale deed since you have sold it for cash.

Thanx a lot for the reply, If we cant calculate LTCG without indexation, then will the LTCG added to income and taxed as per slab or LTCG will be taxed separately without adding to tax slab? What will be the tax rate with indexation?

Abrar

Others

56 Points Joined January 2014

Originally posted by : kanagaraj
	it is only a LTCG, and the rate of tax is 20%+3% cess. without indexation is applicable only for securities transactions.

Thanx a lot for the reply, If we cant calculate LTCG without indexation, then will the LTCG added to income and taxed as per slab or LTCG will be taxed separately without adding to tax slab?