GOOD AFTERNOON MY PARENTS HAVE SOLD A PROPERTY ( FLAT) IN DELHI RECENTLY.( JAN 2023) TOTAL SALE VALUE: AROUND 75 LAKHS THIS FLAT WAS PURCHASED BY THEM IN 2003 AT 4,25,000 . I WANT TO KNOW HOW MUCH MINIMUM CAPITAL GAIN TAX IS DUE FOR THEM. THEY PLAN TO PURCHASE ANOTHER PROPERTY WITH ME. ( SOME CONTRIBUTION FROM MY SIDE) AND GIVE SOME AMOUNT TO MY SISTER ALSO. HOW MUCH AMOUNT CAN THEY TRANSFER TO MY SISTER AS GIFT AND HOW MUCH AMOUNT DO THEY NEED TO INVEST IN NEW PROPERTY TO AVOID CAPITAL GAINS TAX . KINDLY ADVISE ON THE SAME THANKING YOU BEST REGARDS D. MUKHERJEE HOWEVER,

Ans: You need to understand the following things about taxation of your flat:-
1. You have earned a profit (called capital gains in this context) on the sale of your house. So tax is due.
2. However, tax will not simply be 31L – 8.5L. The Govt gives you an advantage of inflation over the years which increases your purchase cost through a process called ‘Indexation’, thus decreasing your tax. Please google and read up on it, or contact a good CA or a financial advisor.
3. You also get credit for registration and stamp duty charges, brokerages paid as also any improvements done in the house of a permanent nature.
4. Please read up on Income Tax Section 54 which also gives out how you can save tax on your final capital gains arrived at.
5. The entire calculations and sale/purchase details have to be shown in the ITR. Most probably you will be filling ITR-2 for this next year but please ascertain the same when you are about to file the tax since rules keep changing.

Ans: The TDS (Tax Deducted at Source) of 1% on the sale of property exceeding Rs 50 lakhs is applicable on the full sale consideration. In your case, since the total sale consideration was Rs 5,973,000, the TDS of Rs 59,730 was deducted as per the guidelines. Based on the information you've provided, you might be liable for Capital Gains Tax. Capital Gains Tax is calculated based on the difference between the selling price and the indexed purchase price. The indexed purchase price adjusts the original purchase price for inflation over the holding period.
The tax on long-term capital gains is usually 20% (plus applicable surcharge and cess) after considering any exemptions or deductions available under Section 54 or Section 54F if you are not investing in another property or capital gains bonds.

To close the transaction and fulfill your tax obligations, you should consider the following steps:

a. Calculate Capital Gains: As explained above, calculate the capital gains based on the indexed purchase price and selling price.

b. Pay Capital Gains Tax: If you decide not to invest in another property or capital gains bonds, you will need to pay the applicable capital gains tax. You can do this by filling out the appropriate sections in your income tax return and paying the tax amount.

c. File Income Tax Return: Ensure that you accurately report the capital gains in your income tax return for the assessment year.

d. Keep Documentation: Maintain all relevant documents related to the property sale, purchase, and tax calculations for future reference

Ans: Each of the beneficiaries shall file ITR separately and pay tax under the head Long Term Capital Gains. Since the plot is sold in June 2024, it shall be reported in ITR of A/Y 2025-26. Rate of LTCG Tax will be 12.50% (on gain only). Cost of plot as mentioned remains Rs.2,00,000.00, however please add Cost of Construction (which is not mentioned in the question) of house in the cost.
All the three are eligible for relief either by investing in house property or purchasing Capital Gains Bonds of NHAI or REC etc.
Most welcome for any further clarification. Thanks.

Ans: 01. In your case, share of each individual in the sale of property is Rs.5,66 lakhs. You have to deduct Cost of Property also from this amount, where as your question is silent about this cost factor. Tax liability shall also depend upon other factors like, whether each one of you have some income from other sources or not.
02. LTCG tax can be saved by investing GAIN in purchasing another residential house, with in specific time limit or you can invest the amount in Capital Gain Bonds issued by the NHAI etc.
Most welcome for any further clarifications. Thanks.