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How can I help my mother save tax on the sale of an ancestral property?

Samkit

Samkit Maniar  | Answer  |Ask -

Tax Expert - Answered on Jul 25, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
Arnab Question by Arnab on May 29, 2024Hindi
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My mother will be selling an ancestral property which will be in her name in a month or two through mutation , She already has 3 flats in her name jointly with my father. is there a way she can save tax on it?

Ans: 54EC bonds to the tune of INR 50 lacs may only be the option with her.

Before selling the ancestral property, she may plan (ie streamline) the ownership in existing 3 properties to avail a higher deduction by reinvesting in another residential house property.

Please note the amendments as laid down in budget which has removed indexation benefits from sale of properties after 23 July 2024.

Please consult your CA before moving ahead.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |9853 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

Asked by Anonymous - Aug 05, 2024Hindi
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My mother sold a house with Rs. 50Lac capital-gain. Can she buy a Rs. 50Lac house to get tax exemption, but register it under my name? Or she need to register in her name and then execute a gift deed to avoid tax for both of us?
Ans: For your mother to claim capital gains tax exemption under Section 54 of the Income Tax Act, the property must meet certain conditions:

Key Conditions for Section 54 Exemption
Ownership: The new property must be purchased in your mother’s name.
Timeframe: Purchase should be within 1 year before or 2 years after the sale of the original property.
Type of Property: Must be a residential property in India.
Can She Register the Property in Your Name?
No, she cannot claim the tax exemption if the property is directly registered in your name.
The exemption is strictly allowed when the new property is purchased in the name of the seller (your mother).
Alternative Option: Gift Deed After Purchase
Your mother can purchase the property in her name and claim the exemption.
After the purchase, she can execute a gift deed to transfer the property to you.
A gift from mother to child is tax-free under the Income Tax Act.
However, you may incur stamp duty charges on the gift deed, depending on your state’s rules.
Why This Approach Works
The Income Tax Department recognizes the exemption because the initial purchase was in your mother’s name.
The gift deed is treated separately and doesn’t affect her eligibility for the exemption.
Final Suggestion
Buy the property in your mother’s name to claim the exemption.
Afterward, transfer it to you through a gift deed to avoid capital gains tax for both of you.
Consult a tax expert for proper documentation and compliance.
This ensures tax savings and a smooth transfer of ownership.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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Sir my daughter got Air 31,203 (GEN category) in JEE Mains. She got NIT Calicut energy engineering and BITS UB 2+2 CSE. She is interested in both computer science and physics.Should she choose between the two or participate in csab. which would be the best choice? and is doing the bits ub 2+2 really worth its money based on how much they learn from both the colleges will it be equal to or better than normal bits CSE program.
Ans: Based on the following insights and information, as well as your daughter's interests and long-term goals & affordability of the fee, choose the most suitable option for her: The BITS Pilani–University at Buffalo 2+2 CSE dual-degree offers two years at BITS Pilani (or Goa/Hyderabad) and two years at UB’s Jacobs School of Engineering, delivering a unified NAAC A++ and NBA-accredited curriculum. It features PARAM supercomputing access, global immersion, capstone projects and a centralized Career Development Centre recording over 90% CSE placement consistency. The dual alumni networks and international accreditation improve top-tier software recruitment and global mobility; however, the total fees and overseas living costs are significantly higher.

As a general-category candidate, the CSAB-Special Round 2025 closing ranks for mid-tier IIITs and GFTIs provide tertiary backup options: IIIT Ranchi’s CSE (AI quota) closed at ranks 31,909–34,325, IIIT Manipur’s CSE-Quantum closed at ranks 45,341–53,737, and peripheral GFTIs such as PEC Chandigarh admit CSE candidates up to rank ~40,000. These options are less attractive than the secured dual degree and energy-engineering seats but remain feasible contingencies.

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Ans: Ashish Sir, With an OBC-CL home-state rank of 24 000, admission into core branches at Rajasthan’s MNIT Jaipur and IIIT Kota via CSAB-Special is feasible for certain programmes, while seats at other NITs/IIITs will likely remain out of reach.

At MNIT Jaipur, the Home-State OBC-NCL closing rank for Computer Science & Engineering extended to about 49 000 in CSAB-Special Round 2, making CSE admission virtually assured with your daughter’s rank. However, ECE seats under HS-OBC-NCL closed near 3 400, and AI/Data Science around 6 800, both well below 24 000, so these branches are not attainable at MNIT Jaipur.

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