My father purchased a plot and gifted me. I offered it. How revenue tax is calculated?
My father had purchased a plot of land in 1995 for Rs. 50,000. He transferred the identical to me throughout the monetary yr 2021-22 as a present. The stamp obligation prepared reckoner worth on the time of switch was Rs. 25 lakhs. I’ve offered it throughout the present yr for Rs. 28 lakhs. What is my tax legal responsibility? Is the revenue of Rs. 3 lakhs brief time period acquire or long run?
Answer: Please word that your revenue isn’t 3 lakhs solely. For the aim of computing capital good points in respect of property acquired as present from specified family members which is exempt below Section 56(2)(x) or as inheritance, the price incurred by the unique proprietor who had acquired it for consideration is handled as the price of the vendor. However, if the property was acquired by such proprietor earlier than 1st April 2001, the truthful market worth (FMV) of such property as on 1st April 2001 could be taken as price, on the possibility of the taxpayer. However, in no way the FMV of such asset could be increased than the stamp obligation fee.
Though the language used the legislation contemplates that the computation of holding interval ought to start from the date when the vendor turned proprietor of the property however varied judicial authorities have held that for the aim of computing the holding interval to find out whether or not the capital good points are brief time period or long run, date on which the asset was initially bought must be taken and indexation must also apply from that date. In case the FMV as on 1st April 2001 is taken as the price then the indexation shall additionally apply from that date.
So you have got the choice to take FMV on 1st April 2001 as your price and apply the indexation from 1st April 2001. The distinction between the listed price and web sale worth is your long run capital acquire.
Balwant Jain is a tax and funding skilled and be reached on [email protected] and at @jainbalwant on his twitter deal with.
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