Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
Open DEMAT Account with in 24 Hrs and start investing now!
Direct Tax »
Open DEMAT Account in 24 hrs
 Govt kicks off direct tax code revision
 ITR 2024 25 Check tax department s update on TDS and refunds
 Income Tax: Why did some taxpayers receive notice for discrepancy in house rent receipt? IT Dept explains
 Income tax exemption: 4 financial instruments you can still invest into before March 31
 CBDT drops small tax demands but not TCS, TDS claims
 ITR Refund: Awaiting money from Income Tax? Here's why you have not yet received your amount
 Income Tax Notice: What to do if you receive a Section 143 (1) notice from taxman?
 Average tax return processing time cut to 10 days: CBDT
 7 types of Income Tax Notice ITR filers may receive for AY 2023-24
 ITR filing: Do these advance preparations before filing your income tax return
 What are the strategies to maximize tax refunds after submitting an income tax return (ITR)?

What is the tax liability on sale of a jointly held property?
August, 07th 2018

What is the tax liability on sale of a jointly held property?

I am 64 years old and want to sell a flat that I jointly purchased with my wife 25 years ago for Rs 2 lakh. The flat will fetch us Rs 30 lakh. The circle rate in our area is Rs 625 per sq. ft. What will be our tax liability? How much do we need to invest to save tax?

Shubham Agrawal Senior Taxation Advisor, replies: The tax liability will be split between you and your wife in the ratio of the ownership of the flat. Ownership ratio will be determined by the sum contributed by each of you to purchase the flat. Long-term capital gains tax will be levied at 20%. Since the property was purchased before 1 April 2001, its fair market value (FMV) as on 1 April 2001 will be taken as its purchase price for calculating capital gains. The FMV will be the cost price of the flat or the price that it will fetch, if sold in the open market, whichever is higher. It is advisable that you to take the help of a registered valuer to determine the FMV. It is this value that the assessing officer will rely on in case of any dispute. Also, since you are selling the flat below circle rates, the circle rates may be adopted for calculating capital gain. Whatever capital gains you do not invest, according to Section 54E of the Income-Tax Act, will be liable to tax.

In order to save long-term capital gains from the sale of a house bought jointly, is it mandatory to buy the new property again jointly? What other ways are there to save capital gains from the sale of a house?

Rakesh Bhargava Director, Taxmann replies: It is not necessary that joint owners must invest jointly to gain exemption from capital gains. They can invest their respective share of capital gain separately into eligible investments. As the joint owners have sold a house, they have two options to save capital gains: Invest the capital gains to purchase or construct a new house, or invest the capital gains to purchase bonds issued by NHAI or REC. These investments must be made according to Section 54 of the Income-Tax Act.

I bought Life Stage Pension Advantage policy from ICICI Pru Life Insurance. This was converted into a paid-up policy after paying five consecutive annual premiums. What will be the tax implications of surrendering it?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: If you surrender this plan before its maturity, there will be two consequences. First, if any deduction has been claimed under Section 80C of the Income-Tax Act towards the premiums paid for the policy, those premiums shall be added to your income and taxed in the year in which you surrender the policy. Second, the surrender value will be treated as income and will be taxable according to the tax slab applicable to you.


Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting