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.
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.
Dear Sir,
Hope you are doing well !!
They need to pay the capital gain taxes @20% on capital gain amount.
They can claim tax exemptions under section 54 if you buy the new property one year before the sale or two years after the sale. In case it is under construction, the new property should be ready within three years of the old property’s sale.
2. If they do not get a chance to invest in a profitable property immediately and still want to save your long-term gains from being taxed, they can invest your capital gains in CGDAS by approaching any public sector bank. The timeframe for the purchase or construction of the property remains unchanged in this case as well. But they can utilise this account momentarily so that they save their gains from being taxed and have more time to finalise a property for reinvestment.
It is required to deposit such unutilised capital gain in the capital gains account before furnishing return of income but not beyond due date for furnishing return of income.
3. Alternatively and/or additionally, they can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual and get the exemption u/s 54EC.
Such bonds shall be redeemable after 5 years. Only interest received on such bonds shall be taxable. There would be no taxes on redemption after 5 years.
We may assist you in entire procedure.
It is advisable to take a phone consultation for detailed discussion.
Thank you for your answers. I read online that senior citizens above 80 are exempted from capital gains tax if their annual income is less than 5 lakhs per annum. And senior citizens above 70 are exempted from capital gains tax if their annual income is less than 3 lakhs per annum. Is this not true? https://groww.in/p/long-term-capital-gains-tax/
- 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.
Hi
No capital gain is not exempt.
They need pay capital gains tax @ 20 %.
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.
No sadly she won't be exempt from tax.
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Thank you
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.
