Income tax returns (ITR) filing: How to get capital gains tax benefits on assets in own name

Published On: 05, Dec 2017 | Source:

You can get capital gains tax benefit on investing proceeds in assets held in own name
l I sold a house in March last year. I filed IT return showing capital gain with sale proceeds deposited in capital gain deposit account. My son purchased a flat in his name in October this year. As we are living together, will it fulfil the capital gains clause purchased in my son’s name?
– Piyush Sarin
The capital gains from the transfer of sale of residential house will be eligible for exemption only if the person invests the amount in the new asset in his own name. Hence, if the amount is invested in the name of your son, the gains made by you shall not be exempt. You can, however, become a joint owner to qualify for the exemption. You have to invest only the capital gains amount and not the entire sale proceeds.

l Me and my wife are co-owners of a flat in Mumbai. My wife has one more flat in Delhi. If she sells the Delhi flat and purchases my 50% share through its proceeds, will it be treated as tax free?
—Mahesh Kumar
The I-T authorities may view such a transaction as an avoidance transaction designed to evade the taxes. This would result in disallowing the exemption and penalty and interest being levied. However, this could be allowed if it could be substantiated that the considera-tion for the house owned jointly by you and your wife, was invested by you and your wife from your own income sources.

l Our late father was gifted agricultural lands by his maternal grandfather through a registered deed in 1955. Our mother inherited the lands after our father’s death in 2005. Now she wishes to dispose off some of the land. What will be her tax liability as she has family pension of`1.8 lakh a year?

—Pushpalata Kumari
Gains from sale of rural agricultural land under Section 2(14)(iii) is exempt from tax. However, if it is urban agricultural land, then its gain shall be taxed. The market value of the land as on April 1, 2001 shall be treated as the cost which shall be indexed to arrive at the capital gains. Since the gain will be long term (as land is held for more than three years), the gain shall be taxed @ 20% plus cess. You can invest this amount in a residential house property under section 54F or in certain bonds under Section 54E (subject to `50 lakh) to save the tax on the gains so made.

The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to