Your Taxes

‘A’ gifts an immovable property (market value ₹40 lakh) to his maternal uncle ‘B’. Does B have to pay gift tax? If so, how much? The stamp duty on the property is 7 per cent, ₹2.80 lakh. What amount would be added to B’s taxable income (₹40 lakh or ₹2.80 lakh)?

J Adhya

Transfer of immovable property without consideration is taxable in the hands of the recipients under Section 56(2)(x) of the Income Tax Act. Though gift received from relatives are exempt from tax in the hands of the recipients, the term ‘relative’ does not include sister’s children, and accordingly, the gift would be taxable in the hands of B. Since the property is transferred without any consideration, the taxable value to be included in the ‘income from other sources’ will be the stamp duty value considered for payment of stamp duty.

I purchased our ancestral property from my brother for ₹1.9 lakh in April 2001. I sold it for ₹4.81 lakh in October 2017. Out of this, I have given ₹2 lakh to my daughter for purchase of a flat under construction. How much tax am I liable to pay on the LTCG arising from the above sale?

Rajan RT

Gains arising from transfer of property held for over 24 months is taxable long-term capital gains. While computing the taxable value, the seller can reduce the indexed cost of acquisition from the net sale consideration.

Since the property was purchased in FY2001-02, the indexed cost of purchase will be ₹5,16,800 (₹(1.9 lakh x 272 / 100). As the actual sale value (₹4.81 lakh) is less than the indexed cost of purchase, the long-term capital loss of ₹35,800 can be set off against any other LTCG earned during the same year.

In case the loss cannot be set off in the same year, it can be carried forward and set off against LTCG within eight years. The ₹2 lakh gifted to your daughter would not impact your taxation. Also, the gift will not be taxable in the hands of your daughter since both the donor and the receiver are relatives as per the I-T Act.

I work for a private company and file ITR-1. During FY2017-18, I sold agricultural land situated in a remote village. With this sale proceeds, I purchased an old residential property near my workplace in the city. Do I have to show these two transactions in my ITR-1 for FY 2017-18?


As per the I-T Act, a rural area is any area outside the jurisdiction of a cantonment board or a municipality with a population of 10,000 or more. If the land you sold is in a rural area and is categorised as agricultural land, it is not a capital asset, and the sale and the resulting gains are not taxable.

You may continue to use the new ITR-1 to report your salary and interest income, provided the total income does not exceed ₹50 lakh. If your total income is over ₹50 lakh, you need to file ITR-2 and disclose the sale of agricultural land as exempt income in Schedule EI and the details of the residential property in Schedule AL.

The writer is Partner, Deloitte India. Send your queries to

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