My spouse purchased a flat in 2003 together with her financial savings. In 2011, when the property grew to become freehold, my title was added within the registry. Now, we need to promote it however the purchaser is insisting on splitting the gross sales proceeds of ₹40 lakh equally and issuing two totally different cheques in our names. My spouse needs to speculate your entire gross sales proceeds in infrastructure bonds in her title alone, after deducting capital beneficial properties. Is this attainable? If so, what are the tax implications?
—Name withheld on request
We perceive that the residential home property was bought by your spouse from her personal funds in entirety and your title was added within the registry as a right being paid by you for a similar. Thus, as per provisions of the Income-tax (I-T) Act, 1961, your spouse shall be the deemed proprietor of the property whereas computing earnings below the top ‘Income from house property’.
Further, capital achieve earnings from sale of such property shall be solely taxable within the fingers of your spouse. Accordingly, capital achieve earnings arising in your title from sale of such property will probably be clubbed along with your spouse’s earnings and will probably be taxable in her fingers.
Since, your entire long-term capital achieve (LTCG) from sale of property is required to be supplied to tax within the fingers of your spouse, she alone will probably be entitled to say deduction in respect of the quantity of LTCG invested by her within the specified notified bonds (together with infrastructure bonds). Accordingly, the quantity invested in specified bonds inside 6 months from the date of sale of home property shall be eligible to deduction (topic to a most of capital beneficial properties quantity), topic to the prescribed circumstances.
As per provisions of the I-T Act, the customer is required to deduct tax at supply (TDS) on the time of constructing funds if the entire gross sales consideration exceeds ₹50 lakh. As the entire gross sales consideration is lower than ₹50 lakh, no TDS shall be accomplished by the customer. Hence, no TDS on this regard ought to replicate within the Form 26AS for you and your spouse.
The sale of property ought to nevertheless replicate each in your and your spouse’s Taxpayer Information Summary (TIS)/ Annual Information Statement (AIS), as out there in your on-line income-tax accounts.
Parizad Sirwalla is companion and head, international mobility companies, tax, KPMG in India.
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