SIR I AM A SR. CITIZEN AND HAVING A PLOT IN JOINT NAME WITH MY WIFE. WHEN WE HAD PURCHASED THE PLOT WE HAVE EQUALLY GIVEN THE PAYMENT TO SELLLER. NOW I AM SELLLING THE PLOT , MY QUERY IS WHETHER WE SHOULD GET SALE PROCEED TRANSFERRED EQUALLY IN OUR ACCOUNTS (ME AND WIFE). WHAT WILL BE THE TAX IMPLICATION. SHOULD WE BOTH SHOW THE SALE PROCEEDS IN OUR IT RETURNS. MY WIFE IS NOW HOMEMAKER BUT FILING RETURN REGULARLY.

Ans: Income from capital gain is required to be reported in ITR 2. Person earning income from sale of investment is required to provide details of personal property held by him/her in ITR if income is more than 50 lacs during the year.

Ans: Namaste,

I understand your situation and I'll try to provide a simple explanation.

For your mother's case, since she has sold a property and made a long-term capital gain, she will need to file her Income Tax Return (ITR) using Form 2 instead of Sahaj (Form 1). The reason being, Form 1 is for individuals having income from salaries, one house property, other sources (interest etc.) and having total income up to Rs 50 lakh. However, in your mother's case, there is a capital gain involved, so Form 2 is more appropriate.
The sale proceeds of the house will be reported under the head 'Capital Gains'. The purchase value of the plots will be reported as the 'Cost of Acquisition' under the same head. The capital gain tax paid will be reported in the 'Taxes Paid and Verification' section.
As for your case, since you have been made a co-owner of the plots, you should also declare this in your ITR. However, as you have not contributed to the purchase, it will not have any tax implications for you. You can mention it under the 'Asset and Liability' section if your taxable income exceeds Rs 50 lakh.
Please note that this is general advice and the exact details may vary based on the specifics of the transactions. It's always a good idea to consult with a tax advisor or chartered accountant to ensure all details are accurately reported.

Ans: Property Ownership and Financial Contribution Clarity

The property was registered jointly with your wife in 1996.

Both were working and filing income tax returns back then.

Entire payment for the plot came from your bank account.

Your wife’s salary mostly handled household expenses.

This makes you the financial contributor towards the asset.

However, the legal ownership shows both names equally.

Hence, the situation combines legal and beneficial ownership.

Documentation to prove this division is now unavailable.

Only income tax returns are available from that time.

Capital Gains Split and Its Tax Reflection

You sold the property jointly in 2024.

Sale proceeds were split 50-50 in your bank accounts.

TDS was deducted on both shares equally.

This has been reported in both of your AIS records.

Income Tax Department will treat this as joint income.

This is because the property was jointly registered.

Taxation is aligned with the ownership structure, not funding source.

Ownership Versus Contribution Debate

Legally, both of you are co-owners.

Financially, you solely funded the property.

This creates a classic ownership-contribution mismatch.

As per income tax law, ownership holds more weight than contribution.

Clubbing of income applies only for certain gifting cases.

This is not a gift situation since your wife was a co-owner from beginning.

So, both will be considered as rightful owners by law.

Importance of Clear Documentation

You don’t have old bank statements from 1996.

Only income tax returns from that time are available.

These do not confirm the funding source with full clarity.

In absence of clear proof, ownership document will dominate.

This weakens your case to claim 100% of capital gains alone.

AIS and TDS Records Support Joint Ownership

AIS (Annual Information Statement) shows 50-50 split clearly.

TDS deducted in equal amounts from both your accounts.

These reinforce the equal ownership story to the tax department.

Reversal of this position now may raise red flags.

It may lead to questions, scrutiny or even notices.

What Should You Do Now?

It is better to assess the situation from a 360-degree lens:

You should declare 50% capital gain in your return.

Your wife should declare the other 50% in her return.

This is more aligned with ownership, TDS and AIS data.

Trying to show 100% under your name may cause mismatch.

Any mismatch with AIS may trigger tax department inquiries.

Risk Assessment: Showing 100% Gain in Your Name

This approach may invite scrutiny.

You don’t have proof of 100% funding.

AIS will mismatch if you try to declare all gains.

TDS credit mismatch will create refund or processing delay.

It is legally not defendable after many years.

Legal ownership still stays 50-50 on record.

Risk Assessment: Splitting 50-50 Between You and Wife

This approach is legally stronger.

It matches sale deed, TDS and AIS reports.

No mismatch will appear in your ITR.

It ensures smooth return filing and refund, if any.

No questions will arise from IT Department.

You are also not violating any rule.

Handling Past Contribution with No Proof

Unfortunately, old bank records are not retrievable now.

Income Tax Department won’t rely on assumptions.

Contributions must be backed by proper documentation.

Absence of proof weakens your claim to full gain.

Property was bought almost 28 years ago.

Any ownership change now won’t be accepted for past.

It’s better to work with the legal status as is.

Things You Should Immediately Do

Mention correct ownership share in your capital gains schedule.

Declare gains under ‘long-term capital gains’ section.

Match sale consideration and TDS as per AIS.

File return carefully under correct head.

Avoid any ambiguity in source or ownership declaration.

Declare sale proceeds in exact split as received.

Planning Capital Gains Reinvestment Smartly

Avoid locking funds in insurance-linked products.

ULIPs or LIC policies mix insurance and investment poorly.

If you hold such policies, consider surrendering and reinvesting.

Prefer diversified mutual funds through regular plans.

Choose experienced Mutual Fund Distributor with CFP qualification.

Direct plans lack continuous review and personalised guidance.

Regular plans offer better suitability analysis by a certified professional.

What to Avoid During Reinvestment

Do not chase returns only.

Avoid direct mutual funds unless fully equipped.

Regular plans offer goal-based asset allocation.

Direct funds may misalign with your risk profile.

Avoid taking advice from informal sources.

ULIPs and Endowment Plans are not tax-efficient either.

Stick with regulated, low-cost, actively managed funds.

Stay away from annuities due to their illiquidity and poor returns.

Family Wealth Management Insights

Joint ownership of property requires joint capital gain management.

Reinvest based on combined family goals.

If children are dependents, plan for their education and marriage.

Create an emergency fund with 6-9 months of expenses.

Use liquid funds or ultra-short duration mutual funds for this.

Keep life and health insurance separately, not bundled with investments.

Monitor goals like retirement, travel, and healthcare costs.

Tax Filing Strategy for 2024-25

Match TDS and sale value with AIS exactly.

Choose ITR-2 if you have capital gains.

Attach relevant documents like sale deed and 26AS.

Avoid revising returns due to incorrect reporting.

Do not delay filing to avoid interest or penalty.

Keep computation documents for future references.

File both your and your wife’s return as per income received.

Family Communication and Estate Planning

Maintain open discussions with spouse about money.

Plan joint goals like home upgrade, retirement, travel.

Draft a Will for both of you separately.

Include all assets like MF, property, insurance, PF.

Nominate each other properly in all investments.

Avoid confusion during succession or legal matters.

Finally

Continue to file your and your wife’s return separately.

Show 50-50 capital gains for smooth compliance.

This avoids tax mismatch and unnecessary stress.

Do not try to claim full ownership unless documents support it.

For future investments, always maintain clear ownership pattern.

Consult a Certified Financial Planner regularly for review.

Build an asset allocation strategy for long term peace.

Best Regards,
K. Ramalingam, MBA, CFP
Chief Financial Planner
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment