I bought 50 Wipro shares for ₹458.65 on February 6, 2017 and sold the shares (including bonus shares) on January 3, 2019. The company had declared 1:1 bonus in April 2017. The January 31, 2018, rate was ₹309 per share.

Please indicate the purchase rate to be considered for the 50 original shares and also for the 50 bonus shares that were credited in June 2017.

SR Subramani

The cost of acquisition of long-term capital assets (listed equity shares) shall be the higher of the following: a) actual cost of acquisition or b) lower of the fair market value of such share on January 31, 2018 (highest quoted price), or full value of consideration as a result of transfer.

Accordingly, the cost of acquisition for the original 50 shares shall be ₹458.65. With regard to bonus shares, the cost of acquisition is nil.

Our inherited property got partitioned recently and a portion of it got allotted jointly to five of us siblings.

Since none of us want to retain the property, we have agreed to dispose it off and divide the sale proceeds equally among us.

Currently, the property is held jointly by all five of us. Kindly let me know how I should treat the sale proceeds in my tax return.

Krishnan

Gains arising from the sale of a capital asset is taxable under the head ‘Income from capital gains’. The gains would be treated as long-term capital gains (LTCG) if the immovable property had been held for a period of more than two years.

Since you inherited the ancestral property, the period of holding shall be reckoned from the date the previous owner had acquired the property.

The costs of acquisition of the inherited immovable property shall be the higher of the cost price to the previous owner or the fair market value as of April 1, 2001.

While computing LTCG, the cost of acquisition determined as above shall be indexed using the prescribed cost inflation indices (CII).

In your case, as the property is proposed to be sold during FY2018-19, the purchase costs should be indexed as under: (Cost of acquisition x CII for 2018-19) / (CII for the year of purchase or 2001-02 (whichever is later)).

In view of the above, one-fifth of the value of the gain computed on the sale of the inherited property shall be treated as LTCG in your tax returns. LTCG is taxable at a special rate of 20 per cent (plus applicable surcharge at 0/10/15 per cent, based on the total taxable income) and cess at 4 per cent).

I recently withdrew my PF balance of ₹8 lakh. This amount is my PF accrual between 2008 and 2017.

My last working day was March 10, 2017, and I am currently a housewife. I currently don’t have any other source of income. Is there any tax liability on the PF amount I received?

Deepthi

Accumulated provident fund balance at the time of retirement/termination of employment is not taxable provided the person has rendered continuous service for a period of five years or more.

As you have rendered more than five years of service, withdrawal of the PF accumulations can be claimed as exempt. Interest earned on the PF accumulations post-termination of employment, i.e., after March 10, 2017, is taxable.

You may have to obtain a bifurcation of the employee and employer PF contributions and the interest paid on such contributions from your PF passbook for determining the taxability under the head ‘Income from salaries/Income from other sources’.

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in

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