My father-in-law had a residential house in Jodhpur. He had eight children. After his death, my wife got 1/8th share in 2010. She passed away in 2017, and after her death, ownership rights of her share were transferred to me and my two sons. We have sold our shares for ₹1.02 crore and have received ₹34 lakh each on 30-07-2024 through a registered sale agreement. ₹1.02 lakh was deducted and deposited as TDS (income tax) in 26 QB (16 B). What are the tax liabilities for each, regarding the share of the house sold? Is TDS deposited refundable, and how?
Since each of you owned 1/3rd of the share in the property sold, the 1/3rd share of the long-term capital gains will become taxable in your respective hands. If your father-in-law bought or constructed the property before 1-4-2001, the proportionate market value of the property can be taken as your cost. If it was acquired after that date, then the proportionate cost actually incurred by him will be your cost for capital gains.
Since the property was held for more than 24 months, the profits will be taxed as long-term capital gains for all three. The benefit of indexation will not be available after the budget, and on the unindexed long-term capital gains, your tax liability will be 12.50% plus education cess. The unindexed capital gains are between the sale price and fair market value as of 1-4-2001 or purchase cost, as the case may be.
Suppose you want an exemption from paying long-term capital gains. In that case, you can either invest the unindexed capital gains in buying or constructing a residential house orin capital gains bonds. If you do not wish to invest in a residential home or bond, you are free to use the money the way you want. If you make investments to avail yourself of the tax exemption, you can claim the refund of the TDS, or the same will be adjusted against your tax liability.
Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and @jainbalwant on his X handle.
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