Each co-owner should be liable to pay tax on the capital gains arising from the sale of property in proportion to the percentage of their respective ownership and funding
Amount invested in ELSS is similar to buying units of an equity-oriented mutual fund and is considered as investment in a capital asset
My husband and I are co-owners of a property since 2010. My husband contributed 10% and I paid the remaining 90%. We sold the property in 2018. Will long-term capital gains tax (LTCG) be divided equally between my husband and I or does it depend on the percentage of contribution towards the purchase of the property?
The basis of apportionment of capital gains in the hands of co-owners, where the property sold was jointly owned or funded, has not been specifically prescribed in the Income-tax Act. The same may, therefore, be considered on the basis of general interpretation of law and various judicial precedents in this regard.
Generally, each co-owner should be liable to pay tax on the capital gains arising from the sale of the property in proportion to the percentage of their respective ownership and funding. This would need to be substantiated with legal documents (purchase deed) as well as respective sources of funding and the proportionate cost. The capital gains tax liability should accordingly be split between you and your husband in the ratio of the amount contributed by each of you individually towards acquisition of the property.
I invested ₹50,000 in an equity-linked savings scheme (ELSS) in March 2015 and I redeemed all its units in April 2018 and got ₹67,000. What will be the tax implication?
The amount invested in ELSS is similar to buying units of an equity-oriented mutual fund and is considered as investment in a capital asset.
Effective 1 April 2018, LTCG arising on the sale of listed shares or units of equity-oriented mutual funds in India that are held for more than 12 months before sale, are taxable, to the extent that such LTCG exceeds ₹1 lakh in the given FY, provided securities transaction tax (STT) has been paid both at the time of purchase and sale of the shares or units of mutual funds. LTCG is taxable at a special tax rate of 10% (plus applicable surcharge and cess).
You can opt to use the highest listed price of the units as on 31 January 2018 in place of the actual cost of purchase, provided the listed price is less than the actual sales value. The resultant capital gains (if any), to the extent it exceeds ₹1 lakh would need to be taxed at 10% plus applicable surcharge and cess. In your case, assuming that you do not have any other similar LTCG, there shall not be any tax liability upon sale of the units under ELSS as the sale value itself is less than ₹1 lakh.
The above would, however, need to be reported appropriately in your income tax return for FY2018-19.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at firstname.lastname@example.org
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!