My spouse purchased a flat in 2003 together with her financial savings. In 2011, when the property grew to become freehold, my title was added within the registry. Now, we wish to promote it however the purchaser is insisting on splitting the gross sales proceeds of ₹40 lakh equally and issuing two totally different cheques in our names. My spouse desires to take a position all the gross sales proceeds in infrastructure bonds in her title alone, after deducting capital positive factors. Is that this doable? If that’s the case, what are the tax implications?
—Identify withheld on request
We perceive that the residential home property was bought by your spouse from her personal funds in entirety and your title was added within the registry as a right being paid by you for a similar. Thus, as per provisions of the Earnings-tax (I-T) Act, 1961, your spouse shall be the deemed proprietor of the property whereas computing revenue underneath the top ‘Earnings from home property’.
Additional, capital acquire revenue from sale of such property shall be completely taxable within the arms of your spouse. Accordingly, capital acquire revenue arising in your title from sale of such property might be clubbed along with your spouse’s revenue and might be taxable in her arms.
Since, all the long-term capital acquire (LTCG) from sale of property is required to be provided to tax within the arms of your spouse, she alone might be entitled to say deduction in respect of the quantity of LTCG invested by her within the specified notified bonds (together with infrastructure bonds). Accordingly, the quantity invested in specified bonds inside 6 months from the date of sale of home property shall be eligible to deduction (topic to a most of capital positive factors quantity), topic to the prescribed circumstances.
As per provisions of the I-T Act, the client is required to deduct tax at supply (TDS) on the time of constructing funds if the full gross sales consideration exceeds ₹50 lakh. As the full gross sales consideration is lower than ₹50 lakh, no TDS shall be carried out by the client. Therefore, no TDS on this regard ought to mirror within the Type 26AS for you and your spouse.
The sale of property ought to nevertheless mirror each in your and your spouse’s Taxpayer Data Abstract (TIS)/ Annual Data Assertion (AIS), as accessible in your on-line income-tax accounts.
Parizad Sirwalla is companion and head, world mobility companies, tax, KPMG in India.
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