What will be the cost of acquisition in case of inheritance?

Q. My father purchased a property in 1978. He expired in 1992, my mother also expired in 1996, the property was transferred by inheritance to my name. I sold it in 2007. I would like to know what will the cost inflation index period be for me, whether it will be as on 1/4/1981 or the day it was transferred to me.

Ans. As per Sec 49 of I.T Act cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be”
Transfer of property by succession, inheritance or devolution shall be considered to be acquisition U/s 49.

Therefore the cost to your father is the cost to you.

Cost Inflation Index From Which Date

Since the property was purchased in 1978, i.e. before 1981, you have the option of taking market value of the property as on 1/4/1981 as cost and then indexing from the year 1981(base yr) (index :100). In any case indexing has to be from year 1981.


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