• Provision of long term capital gain.

I am one of the heirs of a property which was brought by my grandfather, now we are planning to sell the property. Is there any provision of long term gain under Indian TAX law to save on TAX. The property was bought in the year 1951 where it value was merely 30K INR, later it was inherited by 3 sons of my grandfather, the value of the property in now in manyfolds and equal shares will go to all the heirs.
Asked 4 years ago in Property Law
Religion: Hindu

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12 Answers

The entire sale proceeds will be termed as a capital gain and you have to pay capital gain at the specified rate are you have to purchase the property to save your capital gain tax

Vimlesh Prasad Mishra
Advocate, Lucknow
6849 Answers
23 Consultations

4.9 on 5.0

it would attract long term capital gains

2)f an individual or HUF earns capital gains on sale of a residential house and invests the amount of capital gains to buy or construct a new residential property, the capital gain will be exempt from tax.

Conditions attached

New residential property must be purchased either 1 year before the sale or 2 years after the sale of the property. In case of construction, the new residential property must be constructed within 3 years after the sale of the property.

To avail the full exemption, entire capital gains have to be invested in a new property.

In case, entire capital gains are not invested, the amount not invested is chargeable to tax as long term capital gains.

The amount must be invested in purchasing or constructing only ONE house property. The house property must exist in India.

Ajay Sethi
Advocate, Mumbai
89083 Answers
6362 Consultations

5.0 on 5.0

if you want to save capital gains tax then you can invest the capital gains amount in another residential house within the stipulated period

or you can invest in capital gains bonds of the government

Yusuf Rampurawala
Advocate, Mumbai
6999 Answers
79 Consultations

5.0 on 5.0

You can save the tax by investing in the purchase of the house property or the government bonds the net amount. The exemption under section 54 F income tax will be applicable and further for calculation of the amount of capital gain indexation method is used to appreciation of property and everything is seen with time.


Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Dear Client,

You can either invest the capital gains on the purchase of one house within two years or construct one house within three years. Alternatively and/or additionally, you can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual.

Fair market value (FMV) of the land as on 1 April 1981 can be considered as cost of acquisition for computation of LTCG.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

You can reinvest the entire sales proceeds in another residential property. It should be residential and not commercial property within 2 years.

Also, the sale proceeds can also be used to construct another residential property and the leeway one gets is three years.

Siddharth Jain
Advocate, New Delhi
6095 Answers
101 Consultations

5.0 on 5.0

1. Capital Gains can be claimed ONLY by Title-Owners whose names are recorded in the Revenue Records (7x12, Property Card) and ONLY on those properties which are recorded in the Income Tax Returns of the Title-Owners.

2. Apparent /Presumed Legal Heirs, CANNOT claim Capital Gains, since the Property does not stand /transfer in their names,as yet. HOWEVER, once the property is duly transferred in the names of the Legal Heirs, on the revenue records and also recorded in the income tax returns, ONLY THEN the legal heirs can claim Capital Gains ELSE NO.

Keep Smiling .... Hemant Agarwal


Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

1. You have not invested any capital to acquire the said property or any share thereof.

2. You are just inherited the same and is going to sell it.

3. There is no capital gain derived by you in selling your said inherited property if you sell the same after inhering the same.

4. In some case, the I.Tax department has calculated the value of the property at the time of inheriting the same and calculated the capital gain by finding the difference between the amount at which it has been sole later on and the value of the property at the time of inheriting the same.

Krishna Kishore Ganguly
Advocate, Kolkata
26792 Answers
726 Consultations

5.0 on 5.0

You have to purchase another single property equal to the value of capital gain within one year if property to be purchased is an apartment or flat or within three years if property to be purchased is the one which you are going to construct on land.

You can purchase only residential property against sale of residential property.

If you could not use whole capital gain then you will need to pay 20% capital gain tax on unused consideration.

Otherwise you need to pay 20% on whole capital gain tax and remaining money you can use as you want.

Abhilasha Wanmali
Advocate, Nagpur
1022 Answers
1 Consultation

4.8 on 5.0

Simply put, any profit or gain that arises from the sale of a ‘capital asset’ is a capital gain. This gain or profit is considered as income and hence charged to tax in the year in which the transfer of the capital asset takes place. This is called capital gains tax, which can be short-term or long-term. Capital gains are not applicable when an asset is inherited because there is no sale, only a transfer. However, if this asset is sold by the person who inherits it, capital gains tax will be applicable. The Income Tax Act has specifically exempted assets received as gifts by way of an inheritance or will.

T Kalaiselvan
Advocate, Vellore
79241 Answers
1618 Consultations

5.0 on 5.0

This is my response to you:

1. You have to pay the capital gains tax on the property;

2. Any property that you sell after 3 years of purchase, then you are required to pay the capitals gains tax;

3. Consult a local CA and a then a lawyer.

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

Please find below some exemptions for long term capital gains (LTCG):

1.) Exemption u/ Sec.54 of Income Tax Act - You are exempted from paying LTCG tax if you buy a new house either 1 year before the sale of the old property or within 2 years of selling it. If you are planning to construct a new house, this should be done within 3 years of sale of the old property. You can get an exemption on the entire capital gains, or up to the cost of the new residential property, whichever is lower.

Exception under the aforesaid section- You cannot sell the new house bought from the gains of sale of the old house until 3 years after the purchase or completion of construction. This means that if you sell the new house before 3 years of its purchase/construction is completed, the benefit received by you under Section 54 will be revoked and you will have to pay the LTCG tax.

2.) Exemption u/ Sec.54 F of Income Tax Act- Under this Clause you do not have to pay LTCG tax on sale of property other than a house, if you invest the amount received as capital gains to buy a new house. The purchase of the new house should be done either 1 year before the sale of the long-term asset, or within 2 years of selling it. In case you plan to construct a new house, the building should be complete within 3 years of sale of the old asset.

If you invest the whole capital gains amount in buying the new house, you can get total exemption. However, if you are using only a portion of the capital gains amount, you get tax deduction on the proportion of the invested amount to the sale value.

Exception under the aforesaid clause - you can only buy 1 house, you have to buy the house in India, and you cannot sell the house for the next 3 years.

3.) Deposit in Capital Gain Deposit Account Scheme- Capital Gain Deposit Account (CGDA) Scheme, 1988, is complementary to Section 54 and Section 54F. If you are unable to utilise the entire capital gains made in a transaction till the date of filing Income Tax Return, then you can deposit the unutilised amount under the CGDA Scheme in any public sector bank. Once the money is deposited in this account, you need to use it within 2 years (in case of purchase of a new house) or 3 years (in case you are constructing a new house).

You have to open the account before the deadline to file I-T return, and the money must be used only to buy a residential property. If the money is not utilised in buying a house within the time limit, the capital gains will be subject to tax.


Bipasha Mukherjee Roy
Advocate, Bangalore
11 Answers

4.8 on 5.0

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