I purchased a house property for Rs 35 lakh in the year May 2008 The land on which the flat was constructed which is undivided land was registered for Rs 12 lakh and the construction agreement was for Rs 23 lakh. The house is in the joint names of my wife and me. My wife passed away recently on March 2024. Now my 3 children are the legal heirs I have received a legal heir certificate from Tahsildar Chennai. Now the property is going to be sold for Rs 74 lakh before 15th October 2024. Please advise me on how to dispose of the sale proceeds. I am a senior citizen at home in Chennai staying on rented premises. I may not buy any property immediately. Is there capital gain in my case? How much tax do I have to pay or what to do if I don’t want to pay tax?
Ranganathan
Reply by CA (Dr.) Suresh Surana
In the present case, as one of the joint owners has deceased, it would be prudent to consult a legal expert to evaluate the applicable Act (such as the Hindu Succession Act), whether there was any Will executed, legal heir certificate, etc to determine the share of the spouse of the deceased and the 3 children. Nevertheless, please note that on an overall computation of the LTCG, it is observed that there would be no tax payable, though you need to discuss this with your legal / tax consultants, considering the complexity and accordingly consider apportionment of the share of property and related computation on sale of such property.
Particulars | With indexation @ 20% | Without indexation @ 12.5% |
Net Sale Consideration | 74,00,000 | 74,00,000 |
Less: – Cost of Acquisition | (92,73,723) (1) | (35,00,000) |
Long Term Capital Gain | (18,73,723) | 39,00,000 |
Tax Rate | 20% | 12.5% |
Tax on Long Term Capital Gain | – | 4,87,500 |
In the case of the transfer of a long-term capital asset, specifically land or a building acquired before July 23, 2024 by resident Individual / HUF, the income-tax computed under the new provisions (12.5% without indexation benefit) exceeds the income-tax as computed in the old provision (i.e., 20% with indexation benefit), such excess shall be ignored. It is important to note that carry forward of losses of Rs. 18,73,723 shall not be allowable to be carry forward and the benefit of computation under the old provision is provided only for capital gains computation purposes, so that that taxation as per the revised rate of 12.5% shall not be detrimental in case of resident individuals and HUFs who had purchased the property prior to 23 July 2024.
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