My father held some equity shares in certain listed companies for about two years. These have now been devolved to me on his death. What will be the tax implication if I sell these shares now?
— Mohit Singh
As per Section 2(42A) of the Income Tax Act, 1961, if an asset is received by way of inheritance, the period of holding of the previous owner will also be taken into account in determining whether it is a long- term or short-term capital asset. As such, your holding period will be calculated from the period for which it has been held by your father.
As such, the gains arising from sale of shares will be treated as long-term capital gains and will be eligible for tax exemption under Section 10(38), provided they are sold through a recognised stock exchange and the securities transaction tax(STT) is paid on such a sale.
In September 2013, I sold a house and need to pay capital gains tax. If I buy a new home in my wife’s name, would I get exemption from paying property tax?
— Bhaskar Malik
As per Section 54 of the Income Tax Act, an individual can claim exemption from capital gains arising from the transfer of a residential house property if the following conditions are satisfied: (a) The house property that is transferred is a long-term capital asset (i.e., capital assets should be held for more than 36 months); (b) a new house is purchased within a year before, or within two years after the date of transfer of the house property. Under Section 54 of the Income Tax Act, a taxpayer transferring a property— where the resulting capital gains on transfer has been re-invested in a residential property in the name of such taxpayer or a property jointly co-owned along with the spouse — will be eligible to claim exemption.
In your case, as the new home is in your wife’s name and assuming that you are not a co-owner in such a house property, you will not be eligible to claim exemption from capital gains.
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