What are the tax implications on items?

I’m a Hindu male and personal a 3BHK joint property with my father the place he stays. My father owns one other 1BHK property in his title the place I keep. We wish to promote the 1BHK property to personal a much bigger home. In the top, my father and I want to personal separate properties in particular person names.What are the tax implications if I get a present of 100% stake within the 1BHK home from my father and provides him in return a present of my joint 50% stake within the 3BHK home? What are the capital positive factors implications if after turning into 100% proprietor of the 1BHK home, I promote the property to improve to a much bigger flat? All properties are in Mumbai.

—Name withheld on request

We have assumed that the 1BHK property owned by your father is a residential home property, and the identical was acquired after 1 April 2001 and it has been held by him for greater than 24 months.

As the reward can be given by a specified relative, the transaction of reward itself is not going to give rise to any tax implications in both your or your father’s palms. Accordingly, when the 100% stake within the 1BHK property is presented by your father to you and when 50% stake within the 3BHK property is presented by you to your father, there shall not be any tax implications in your or your father’s palms. Please be aware that the onus of proving that the mentioned transactions are impartial and within the nature of reward rests with the taxpayer.

Generally, reward of an immovable property could be effected by a registered reward deed together with fee of relevant stamp obligation.

Subsequently, if you promote the 1BHK property, as it is going to be held for greater than 24 months previous to such sale, the mentioned property will qualify as a long-term capital asset. The resultant acquire/loss arising out of sale of mentioned property can be taxable as long-term capital positive factors/ loss (LTCG/L) in your palms. LTCG/L is calculated because the distinction between internet sale consideration and the listed value of acquisition (ICOA) and enchancment.

Since the home property has been transferred by reward, the price of acquisition for you can be the price to the unique proprietor. The listed value of acquisition of the asset in your case can be calculated as value of acquisition/value inflation index (CII) of 12 months of acquisition * CII of 12 months of sale. (CII prescribed for FY 2021-22 is 317). Further, if the precise sale consideration is decrease than the stamp obligation worth by greater than 10%, the stamp obligation worth can be considered the deemed sale consideration, for the aim of calculating such LTCG/L. The tax is payable by you at 20% on the ensuing LTCG. A rollover exemption on the ensuing LTCG is out there in the direction of the next investments, topic to the prescribed situations and timelines:

• Under Section 54 of the Act, by investing the LTCG in a brand new residential home;

• Under Section 54EC of the Act, by investing the LTCG in specified notified bonds; and

• Under Section 54GB of the Act, by investing internet consideration in fairness shares of an eligible startup.

Parizad Sirwalla is associate and head, international mobility providers, tax, KPMG in India.

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