Capital gain exemption if new property purchased on HUF name

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  1. Anand Mantha

    Anand Mantha Member

    Sir, My mother has a Vacant site at Hyderabad, purchased in 1980 ( sale deed in her name).However the funds for the purchase, has been provided by my father,who was a govt. employee, who has since passed away.In the year 2011, my mother gifted 1/4 share in undivided land, to each of her 3 sons, retaining the 4th share for herself.This was done by way of a single Registered gift deed.No partition deed was made.Now all 4 of us want to sell the land to a single buyer,for a consideration of 1.8crores.Individual share will be 45 lakhs each.
    1. Does this attract 1% TDS?
    2.I am the Karta of my families HUF,with a seperate Pan card and tax filing every year. Can I use the sale proceeds of 45lakhs, to buy a flat in, any HUF members name(My son, daughter), and claim capital gains exemption under sec 54F? I cant buy in my name, as I own 2 residential properties already(under HUF),and become ineligible under sec54F. Please give your expert advise.
     
  2. Anand Mantha

    Anand Mantha Member

    Also, I would like to know HOW the Capital Gains will be calculated for MY Mother(as she is the original owner since 1980 and the site was purchased for Rs 1074.00)) and for each of us (who got 1/4 share in the undivided land in the year 2011).
     
  3. Karan Batra

    Karan Batra Well-Known Member

    1. Yes, TDS on Property @1% would be applicable in this case as the Transaction Value is more than 50 Lakhs
    2. Capital Gains Exemption would only be available in case the property is purchased in the name of the seller and not in any other name. Therefore, Cap Gains Exemption wont be available if you buy in the name of the HUF
     
  4. Karan Batra

    Karan Batra Well-Known Member

    The cost at which your father purchased the plot would be considered as the Cost of Acquisition.

    This would be divided in the ratio of the shares of the mother and the sons
     
  5. Anand Mantha

    Anand Mantha Member

    Mr.Karan, Thankyou for the clarifications. My thinking is follows--please correct if I am wrong. Since the site was purchased in 1980,and indexation started from 1-4-81, for my mother---- she needs to get it valued as on 1-4-81 and then indexation can be applied till 2016.The sons got their share,in 2011.Is there any change in calculating indexation for them.
     
  6. Karan Batra

    Karan Batra Well-Known Member

    Yes, your understanding is correct
     
  7. Anand Mantha

    Anand Mantha Member

    Thanks again. You havent answered the second part of question. Do the 3 sons need to get the property valued as on 2011, and then apply indexation from 2011 to 2016, to calculate the capital gains?
     
  8. V K Khanna

    V K Khanna Active Member

    The property has to be got valued once as on 1.4.1981 and then indexation will be applied till 2011 when your mother gifted the property to her sons. The cost of acquisition after indexation will be cost applicable as on 2011. There is no further valuation of the property.
     
  9. Anand Mantha

    Anand Mantha Member

    Thankyou Mr Khanna.
     
  10. Anand Mantha

    Anand Mantha Member

    Mr Karan/ Khanna, In this same case scenario, since the total sale consideration is 1.8croes,the buyer deducts1%, which comes to 1,80,000. 1.) Is service tax, vat,or any other tax levied on this (vacant site) .2) Since there are 4 sellers and 1 buyer,how many Form 16B s , should be collected from the buyer.We are requesting the buyer to pay by way of DD, an amount of 45 lakhs each,for 4 buyers(1/4th share), and also deduct TDS seperately(45000 each),and give us each the form 16B.All this will be incorporated in the sale deed. Is this ok?
     
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