Father acquired property in 1991 for Rs.4 lakh, but through settlement deed registered in 2009 transferred to son. In settlement deed Rs.20 lakh mentioned as market value of property and based on which stamp duty fee was paid. Now when son sells the property in 2022, can Rs.20 lakh be considered as purchase price of property and indexation be done from 2009 on Rs.20 lakh for calculation of capital gains?
Since you received the asset as a gift, your cost of acquisition will be the same as the cost for your father and period of holding will
start from the day when your father bought the asset
purchase price of property would be considered as Rs 4 lakhs for calculation of capital gains
No.4 lakh will be considered
As of cost inflation index for calcuating capital gains has been starts from 2001 as base, can valuation of property be considered as of 2001 as base for calculation? or if it is from 1991, how can indexation be applied?
In case of assets acquired prior to the base year, taxpayer has an option to choose either Fair Market Value (FMV) as on the first day of base year or actual cost to arrive at indexed cost and compute capital gain/loss.
At present, the base year is fixed at 2001 and CII for the base year starts at 100 and keeps increasing every year.
The property though the market value given as Rs. 20 lakhs, but since it was transferred by a settlement/ gift deed, the LTCG may be calculated as per the value on the date of acquisition of property by your father.
The LTCG will be calculated as on the date of acquiring the property by your father.
How to ascertain Fair Market Value (FMV) of property as of 2001, which department will accept?
1. Rs. 20 lakhs was shown as the market value of the said property but not the amount paid for buying it.
2. So, while selling the said property Rs. 20 lakhs can not be shown as the amount paid top buy the property in the year 2009 for calculating the Capital Gain Tax.
1. You show renovation of the property on different dates from the year 1991 collecting Bills of earlier dates from various renovators to ensure that the value of the property in the year 2001 reached more than Rs.20 lakhs or as much as you can show.
2. In that case you can get the indexation done on all the investments you have made on your said property including its original price for which the Capital Gain Tax might be minimum.
You can avail the running rate of the property of your area in the year 2001 and can calculate the fair price of your property in the year 2001.
The FMV can be obtained from the registered valuer.
Dear client, Captain gain will be calculated from 2009 onward
Fair market value can be ascertained through the office of the sub registrar within the vicinity of the location of property.
- As per law, when an asset is gifted or inherited, the taxpayer does not have a purchase price he can attribute to the asset. T
- Further, in case of gift or inheritance, the purchase price of the previous owner would be treated as the purchase price for computing capital gains of the taxpayer.
- Since, this property was transferred to the son through settlement deed and there was no consideration amount was paid with the transfer of the property , then it will be considered as a gift deed.
- Further, as there was no consideration amount , then the purchase price of the property in 2009 will be considered for the calculation of capital gains.
It's with the sub registrar office. All values are determined for assessment by said office