I and my wife co own a flat from 1994 in Mumbai. Now we want to sell it and reinvest in a residential house . Do we have to pay income tax on the amount we receive and how much will it be

Ans: If person acquire house property in FY 2014-15 in Rs.32,50,000 and transfer it in FY 2023-24, indexed cost is likely to be Rs.47,12,500. Thus, on difference amount (65 lacs and 47.13 lacs), long term capital tax @20% will be charged. You can calculate exact tax amount through income tax calculator available at https://incometaxindia.gov.in/Pages/tools/indexed-cost-of-acquisition-or-improvement.aspx

Ans: You plan to invest the entire sale proceeds in constructing a new house on your wife’s plot. Under Section 54 of the Income Tax Act, you can claim an exemption on the capital gains if you reinvest the amount in a new residential property within a specified period. Since the new house is in your wife’s name, ensure that the reinvestment meets the criteria of Section 54 to claim the exemption.
If the full capital gain is reinvested, you can claim exemption and avoid paying tax on the LTCG. However, any unutilized portion of the gain will be taxed.

Important Points to Consider
Joint Ownership and Tax Exemption:
Since the flat is jointly owned, each of you must reinvest your respective share of the capital gain to claim the exemption. As the new property is in your wife's name, you might still be eligible for the exemption if the entire capital gain amount is utilized.

Consult a Certified Financial Planner:
Given the complexities and the involvement of joint ownership and different tax brackets, it's advisable to consult a Certified Financial Planner (CFP) to ensure that the transaction is structured correctly to minimize or eliminate tax liability.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Yes. You are liable to pay Income Tax for the portion you are surrendering to the builder. Sale Consideration will be considered as value of developed area on stamp duty rate, you have retained after its Redevelopment.
Most welcome for any further clarifications. Thanks.