Capital gain tax

Respected sir , i give my ancestral house which i got from my father  to my brother by way of a settlement deed.recently.(15.01.2016). Now he sells that house to a third party for Rs.30,00,000/
but the sale deed is as per the guideline value i.e,Rs.10,00,000/- This is only a an ancestral property how it can be said to be a capital gain.Whether he has to pay the capital gain tax for the above 10,00,000/at what rate? If otherwise How to get exemption?
    Hoe to spend the other 20,00,000/ - to avoid tax? What would be the effect if deposited in SB A/c/
Asked 5 months ago in Capital Gains Tax from Kancheepuram, Tamil Nadu
In the present case if it is ancestral or otherwise the sale will attract capital gains.

If the same is invested in purchase of another residential property then as per section 54 of the it act the capital gains is exempted. In the present case he need to invest the full amount as the cost will be negligible.

If he has received officially 30 Lakhs then on the whole amount tax will be levied.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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Dear Tax Payer,

In your question, we have to analyse four critical aspects;
1. Who is liable to pay Capital Gain tax?
2. What is the capital gain amount?
3. What are the exemptions available to the assessee?
4. What to do with the unaccounted money of Rs. 20 Lakhs?

My Observations are as follows;
1. As your brother is the owner of the property, he will be liable for Capital Gain tax payments.
2. Due to the absence of the required information, I will not be able to analyse this aspect.
3. There are exemptions available under section 54 or 54 F (depend upon the nature of property sold) by investing a new house property and  under 54EC by investing in eligible bonds subject to conditions as laid down in these sections.
4. You have to disclose the entire sale consideration to ensure proper tax payments.

Please note that w.e.f 1 June 2015, accepting sale consideration in cash will attract penalty u/s 269SS.

Regards,
CA. Rajeev P T, BBA, ACA, ACS
Email: ca.rajeevpt@gmail.com

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge
Rajeev P T
CA, Chennai
34 Answers
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Dear Tax Payer,

If the sale is not happened yet, please get the sale consideration by cheque/NEFT. That is the only way to get rid of penalty u/s 269SS.

Regards,
CA. Rajeev P T, BBA, ACA, ACS
Email: ca.rajeevpt@gmail.com

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge
Rajeev P T
CA, Chennai
34 Answers
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Dear Sir

1) Eventhough it is a ancestrol property, the sale of property is subject to Capital gains on sale. The tax payable will be on capital gains (Sale value less Cost of Acquisition/Value as on 01.4.1981-assuming it is inherited before that date). To get an exemption from capital gain , he can invest the entire amount in another house property (or) He can invest the same in Capital gains bonds (with a lock in period of 3 years). If you deposit the same in SB Account, entire capital gains will be taxable @ 20%.

2) It does not make any difference if he is a govt servent paying income tax. This capital gain will be an income in his hands in addition to the salary income he is getting.

3) 269 SS - you cannot overrule the applicability of this section.

4) Yes you can get a cheque prior to the date of registration. But it does not make any diffrence in either capital gains or 269SS applicablility
B S Sridhar
CA, Chennai
35 Answers
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Has he received remaining 20 Lakhs in Cash or cheque.
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
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Hello Sir,

As per the the facts provided by you, herewith are your answers.

1. Capital Gain is application no matter the property is ancestral or otherwise.

2. Deduction can be claimed u/s 54 by investing the gain in purchase of other House Property or u/s 54EC by investing in Govt Notified Bonds.

3. Being a Government Employee has no role to play in deciding the Capital Gain factor.

Trust this clarifies your query. 

Please feel free to call/ get back in case of any further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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Dear Sir,

About 269SS, as per the details provided by you it appears that you are receiving 20 Lakhs over and above your agreement value and it will not be stated anywhere in your agreement. 

If I have assumed it correct then that is Black Money and is no where in the picture and 269SS is not applicable. To go ahead or not with such a transaction is totally your call.

If it is mentioned in your agreement that agreement value is 30 and 10 is via bank and 20 is via cash then 269SS is applicable and there is no exit route.

Trust this clarifies your query. 

Please feel free to call/ get back in case of any further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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Dear Sir,
Please find the response below:

1. your brother \he will be liable for Capital Gain tax.
2. There are exemptions available under section 54 or 54F by investing a new house property and under 54EC by investing in REC/NHAI bonds.
3. You should disclose the entire sale consideration to ensure proper tax payments but please be aware that accepting property sale consideration in cash from 1 June 2015 onward will attract penalty equivalent to amount received in cash.

Thanks and Regads,
CA Abhishek Dugar
Abhishek Dugar
CA, Mumbai
766 Answers
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Dear Sir,

Is it mentioned in your agreement that you have received 10 in Cheque and 20 in Cash ?

Trust this clarifies your query. 

Please feel free to call/ get back in case of any further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
719 Answers
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Dear Tax Payer,

Yes. you can receive the sale consideration by way of cheque. The penalty will be imposed both on seller (under section  269T) and buyer (under section 269SS) if the sale consideration is paid or received in cash.

The information will go automatically to IT by way of Annual Information Report from the sub-registrar office. If the case is taken for scrutiny, both the buyer and seller will be in trouble.

It is not the duty of registrar. Also, many people are taking cash which is not even shown in the document. Please note that ignorance of law is not an excuse.

Please ensure that you are safe in this case by doing the needful.

Regards,
CA. Rajeev P T, BBA, ACA, ACS
Email: ca.rajeevpt@gmail.com

*****This Opinion is based on stated facts and the legal position as on date. The views expressed may not be relevant where there is any change in facts or law. This Opinion is not in the nature of an assurance that an alternative view or interpretation cannot emerge
Rajeev P T
CA, Chennai
34 Answers
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  Talk to Rajeev P T
hi any queries
Shyam Sunder Modani
CA, Hyderabad
955 Answers
4.9 on 5.0
  Talk to Shyam Sunder Modani

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