• Tax liability for senior citizens

My parents are senior citizens - Dad aged 83 who has an income of 9 lakhs per year. Mom aged 77 who has no income and never filed IT return. They have recently sold a residential property held jointly in their names in equal proportion . The sale proceeds have also been received in their individual names in equal proportion. The long term capital gains arising out of this transaction is INR 120 lakhs which I guess both will be jointly liable to the tune of INR 60 lakhs each. Is capital gains exempt for my mother as she has no other income. The long term capital gain has been arrived at after considering fair market value as on 2001 as property was originally purchased in 1985. Tds has been deducted at source on the sale proceeds.
Asked 12 days ago in Capital Gains Tax

Hi

 

The capital gains would be taxable in both of their hands. (Assuming both of them are actual owners of the property and not just for namesake).

 

LTCG would be taxable at the rate of 20%.

 

Capital gain exemption could be claimed by reinvestment in other residential house property or section 54EC eligible bonds.

Lakshita Bhandari
CA, Mumbai
5403 Answers
487 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

They need to pay the capital gain taxes @20% on capital gain amount.

 

 

Payal Chhajed
CA, Mumbai
5039 Answers
137 Consultations

5.0 on 5.0

- Under income tax, person who has financed the property is treated as owner of the property. Please check whether both have financed the property or one of them. Income tax @20.8% is applicable. In the hands of mother benefit of exemption will be available as she is not having other income.

- For capital gain exemption, they can invest in other house property or bonds. Maximum investment limit in bonds is Rs.50 lacs within six months from the date of transfer. Fill the ITR properly with capital gain schedules. It is advisable to take the assistance of expert.

Vivek Kumar Arora
CA, Delhi
3986 Answers
312 Consultations

5.0 on 5.0

Hi

 

No capital gain is not exempt. 

They need pay capital gains tax @ 20 %.

Karishma Chhajer
CA, Jodhpur
2353 Answers
19 Consultations

5.0 on 5.0

Hi

 

They can get exemptions under section 54 

  Section 54 of the Income Tax Act: Capital Gains Exemption. ... Under section 54 of the Income Tax Act, it is stated that if the seller of a residential property acquire or construct another residential property from that amount he or she get benefits in capital gains tax.

Karishma Chhajer
CA, Jodhpur
2353 Answers
19 Consultations

5.0 on 5.0

No sadly she won't be exempt from tax.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback also you can book a consultation for more detailed discussion.

Thank you

Naman Maloo
CA, Jaipur
3766 Answers
44 Consultations

5.0 on 5.0

These are normal exemption limits. If the total income is below 5 lakhs tax rebate will be available. Here since capital gain amount is high tax liability will be there. This can be saved by investing in another property or bonds. Upto 50 lakhs can be invested in bonds while in case of investment in another residential property there is no limit.

Ruchi Goel Anchal
CA, Gurgaon
432 Answers
4 Consultations

5.0 on 5.0

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