• Son wants to sell his Property share to Grandson

Hi All,

My Grandfather (Mr.A) is having a property in Indore (M.P.) . He has 5 sons, among who it will be going to inherit (Total 5000 sq. ft., 1000 sq. ft. for each one). Currently one of his son (Mr. S4) wants to sell his property share, and once of his Grandson (Mr. GSP) is interested to purchase the same. In Grandfather’s presence, what is the legal procedure to do it, so that in future his grandson (Mr. GSP) will not face any problem. I have tried to represent it below, to avoid confusion. 
                        __ Mr. S1
                      |
                       __ Mr. S2 
                      |
     Mr. A   ---- |__ Mr. S3-------- Mr. GSP 
                      |
                       __ Mr. S4-------- Mr. GSN (Me)
                      |
                       __ Mr. S5
 
The above property is worth 5 Cr. (1 Cr. For each son). Mr. GSP is currently staying abroad and Mr. S4 is a residence of India. Mr. GSP is going to make the Payment through NRI account. The mode of Payment will be in EMI as mentioned below:

Financial Year	Payment
2017-18	        4000000
2018-19	        1500000
2019-20	        1500000
2020-21	        1500000
2021-22	        1500000
Total	       10000000

Below are the three solutions, we get to know after consulting some of our friends.
1)    Mr. A can register 1000 sq. ft. of the total area in the name of Mr. S4 and then he will register the same to Mr. GSP. (possibility of it to be happen is very less)
2)    We can take a copy Mr. A’s WILL and based on the WILL copy, we will create an agreement stating that Mr. S4 is surrendering his property share to Mr. GSP for so and so amount. Based on that Agreement Mr. GSP will claim the property share in future. 
3) One of the simplest solution is that Mr. GSP will transfer the amount to Mr. S4 and he will pay the tax as per the guideline i.e. 30% but this will be the last option.
 
Below listed are questions/queries:
1)	For Solution 2, Mr. GSP has a question that, how can he be assure that, after he purchased 
        the property the WILL is not going to change in future?
2)	Will Mr. S4 have to pay the property gain tax? If yes, then how much, how can it be save? 
3)	The government has changed the base year for indexation of cost to 1 April, 2001 from 1 
         April, 1981, for long term capital gains tax. In-case long term capital gain is applicable for us 
         then:
   a.	Long term Capital Gain w.r.t. base year for indexation of cost to 1 April, 1981 will cost less or           
        base year for indexation of cost to 1 April, 2001 will cost less?
   b.	Base year for indexation of cost to 1 April, 2001 will be applicable for all the transaction done 
        after 1st April 2017 or for the transaction done after 1st July 2017?
4)	Will this scenario be considered under property inheritance case for either Mr. S4 or for Mr. 
         GSP?
5)	 If Mr. S3 (Mr. GSP's Father) wants to contribute some amount from his Indian Account, then:
    a.	 Will he get any Income Tax Rebate? if yes then please list the same.
    b.	 If he gifts the amount to Mr. S4, will it be taxable? what will be the Income tax on the same?
    c.	Is there any benefit if Mr. S3 transfer the amount from his HUF account to Mr. S4's HUF 
        account?
6)	Can Mr. GSP Gift that amount to Mr. S4 and will it be taxable? if yes then what is the total 
        percentage of Income Tax Mr. S4 have to pay?
7)	 Is there any benefit if Mr. S4 take that amount in his HUF account from Mr. GSP/Mr. S3? If 
         yes then please list them.
8)	Can Mr. GSP/Mr. S3 transfer the amount to all the 4 Family members of Mr. S4 + to their  
       HUF Account. As the total amount is being transferred to 5 different account, the over-all 
       income tax percentage will be less?
9)	As Mr. S4 is getting the amount in different Financial Year, how can he justify/explain/show 
        the same to Income tax department or what document as a proof Mr. S4 and Mr. GSP should 
        have to justify their transaction if in case requested by Income Tax Department.
10)	As Mr. S4 is getting the amount in different Financial Year, under which section, will this 
        Income be shown?
11)	I (Mr. GSN) have a home loan, will it be possible that Mr. SGP/Mr. S3 gift me/pay me x% of 
        the total amount and I will re-pay the home loan, can I save Income tax by doing so?
 
Please provide your expert advice on the above three solutions as well as for all the questions and feel free to share the best idea to make it work with proper documentation, in such a way that:
1)	It will cost minimum Income tax to Mr. S4 and his Family members.
2)	It will provide Maximum Income Tax Rebate to Mr. GSP and his Family members.

Thanks and regards,
Nayan (Mr. GSN)
Asked 7 years ago in Property Law
Religion: Hindu

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2 Answers

1) it is self acquired property of grand father

2) as on date none of his sons have any share in his property

3) it is only if grand father dies intestate that his 5 sons would inherit property equally

4) further even if grand father has executed will he is at liberty to change the will during his lifetime

5) since S4 does not have any share in property during grand father lifetime question of his selling his share to grand son does not arise . hence your 2 nd solution is not tenable

6) MR A grand father can execute gift deed for his one fifth share in property to S4 who in turn can sell it to grand son

7)sale of property by S4 would attract long term capital gains

Ajay Sethi
Advocate, Mumbai
95208 Answers
7610 Consultations

5.0 on 5.0

The property now belonging to grandfather, he is the only person to decide about the property disbursement.

If the grandfather executes a family partition and allots the shares to his sons as per his plan and desire, then the sons can acquire their respective shares through a registered partition deed or a registered family arrangement deed. After this the respective owners of the property can decide to sell the property or transfer the same by another registered deed to any one of their choice ads per their desire.

Alternately the grandfather can directly execute a registered gift deed in any of his grandson with any portion of his property at his desire and choice and this will be valid because he has marketable title to the property hence he can rightfully transact with the property in any manner of his desire and choice.

Therefore without getting the property or any share by the sons, it would be too early to discuss about other issues what you have raised now.

Once a share in the property has been possession to the sons, they can sell it or give away by gift or settlement etc as per their desire.

T Kalaiselvan
Advocate, Vellore
85409 Answers
2237 Consultations

5.0 on 5.0

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