1. My wife is private school teacher anuual income 250000/=( not filing ITR) 2. Father in lawa purchased land in year 1984@ 80'000/= 3. Father in law died in 2016. 4. Left 8 owners on the same property. 5. Propert sold@ 1,32,00,000/= in 2018 6. Wife is getting @ 16,50000 as her share of sale. 7 How much will be the tax if only 1100000/= invested in bond and 550000/= returned to the buyer.
Hi,
If she will be investing RS 11 lakh in 54EC Bonds and RS 5.5 lakh returning to buyer then there will be no tax liability.
If she will not returned the money to the buyer, then she will be liable to pay approx RS 1.14 lakh as long term capital gain tax.
1. Returning money under the clause of sale deed, 2. money will be returned through cheque to the buyer.... 3. Not understood very clearly why no income tax on 5.5 lakh which we will return... 4. Only bond of 11 lakh will be purchased.
For calculating capital gain I need to have the FMV (i.e. fair market value) of such land for 2001-02.
If you need to return 5.5 lakh then reduce the sale amount it would be great and simple.
If your sale amount is finally 11 lakh and if you are investing full 11 lakh in bonds then you don't need to pay any capital gain tax irrespective of what your FMV is.
So you need to show only 11lakh as sale consideration and not 16.5 lakh, but ask buyer to make deed of less amount.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
To compute the capital gains tax liability, I will need to know the fair market value of the land as on 01.04.2001. After applying indexation benefit, we can arrive at the capital gains.
Having said that, if you are reinvesting the entire 11 lakhs in specified bonds, there will be no tax liability on your part. Also I am not very clear about returning the money to the buyer. You can as well reduce the amount in the sale deed instead of getting into this structure.
Regards,
Nikhil.
Hi,
- As it is an inherited property, get the FMV of the property as on 01.04.2001. Distribute the FMV equally among 8 owners to arrive at the LTCG.
- You have sold house propery therefore you need to invest only capital gain to avail exemption.
- What do you mean by returned to the buyer?
Thanks
Dear Sir/ Mam 1. I have to return 5.5 lakh to buyer because of following reasons A-- property became disputed because of misunderstanding among family members B-- As per circle rate it has to be sale of at 1.32 crore. C-- Buyer agreed to purchase it 90.4 Lakhs D-- Above amount equily divided into 8 parts making it 11.3 lakh to eight share holders. E-- Thus he will initially give each member a cheque of 16.5 Lakh., And out of recieved money I hv to return 5.5 Lakh ( Approximately)... F-- Remaining 11 lakh I will invest into bonds. G-- Advise me if I hv to pay any tax on the amount returned to the buyer i.e. 5.5 Lakh
No need to pay tax on 5.5 lacs.
No, you don't need to pay ant tax on returned money.
Hi,
Hope you are doing well !!
For capital gain caculation we need the FMV of land as on 01.04.2001.
What is actual sales amount in sales deed?
If the actual sales amount after reducing the returning money is Rs. 11 lakh and you are investing Rs. 11 lakh in bonds sepcified u/s 54EC there there will be no tax liabilty.
Thanks & Regards,
Payal Chhajed
If everything is properly documented then there is no tax liabilty on Rs. 5.5 lakh.
There is no need for you to pay tax on the returned money i.e.5.5 lakhs.
So the sale consideration will be considered as 1650000 for your wife even though she is returning 5.5 lakh to buyer but you don't need to pay tax on entire 5.5 lakh, you need to first calculate it's indexed cost of acquisition and for that you need it's FMV in 2001-02 as the property was purchased before that.
After you find indexed cost of acquisition deduct it from sale consideration and if that difference is more than 11 lakh i.e. the amount you are investing in bonds then only you need to pay tax on it.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
As your effective cost is 11 lacs and whole sales proceeds are invested in bonds.. so no tax liability...
Also your cost of acquisition would be the FMV as on 01.04.2001 and then less it from 90.4 lacs and remaning will be your captial gains and accordingly you can plan investment and tax liability.. if above investment is not done
Hi
Get the FMV of property as on 1.04.2001 inorder to calculte capital gain amount.
Since you invested 11 lacs ,there will be no tax on capital gain amount.
No tax on 5.5 lacs as wel.
Hope it helps
Hi
The facts are not very clear. As far as I have understood it,
Firstly, on receipt of such money out of the sale as a legal heirs is not chargeable to tax. There shall be no taxes involved.
Secondly, you can't return 5.5 lacs just like that. How is that person related to your wife? If he's covered under the definition of relative as per income tax, it would be advisable to execute a gift deed.
