Tax when a property is gifted

Tax queries 438 views 10 replies

Suppose a new property is gifted to a relative. Will the relative who has been gifted the property need to pay tax for that as the gifted house is a income to the relative?

Replies (10)
Property income is taxable in the hands of the person who gifted the property.

Do you want to mean that the relative who got the gift is not needed to pay tax for getting the property?

Do you want to mean that the person who gifted the property needs to pay tax? 

What is the tax calculation to calculate the amount of tax that the person who gifts the property needs to pay the tax?

Yes, tax is payable by the person who gifted the property. Method of computation can't be explained here. Google it.

gift received from relative is not taxable. neither the receiver nor the giver need to pay any tax on it. 

Who is this relative?? It should come under the tax perview. If the definition of relative is satisfied, no tax is implied.

In my career of about 45 years, I have seen three modules of taxability of Gift.

Earlier days, gift tax liability was on DONOR.

From 1998 to 2004, in the second phase, Gift tax was totally abolished. 

Because of its misuse, It was re-introduced in 2004, but now the tax liability was over DONEE; or gift receiver.

At present, gift tax is covered under section 56(2) of the Income Tax Act, 1961. The Act provides that any gift received in excess of Rs.50,000 in form of cash, demand draft, cheque or specified assets by an individual or Hindu undivided family (HUF) is taxable under the income tax head ‘income from other sources’. If the value exceedsRs.50,000, the whole amount is taxed.

So, you as a donor, has no tax-liability over the gift, if gifted after AY 2005-06.

If your relative falls under defination of IT section 56(2)(vI), as relative, for him Gift will be exempt or tax-free.

Let me clarify, what I meant was income arising from the property (rent) will be taxable in the hands of the transferor.
The gift is not taxable if it is from 'relative' as explained in sec 56(2)(vii)

Relative means brother-in-law, wife, mother, father, sister, son-in-law, sister-in law. Can you please now say whether the property gifted to the relative will be taxable or not by the the prson who gifts or the gift receiver.

Thank you to all who responsed. 

Hello
Yes all are covered under relative definition as per Income tax act, Gift wont be taxable

Neither the receiver nor the giver needs to pay any tax on it.

Sorry, my bad. Income from property transferred to spouse will be taxable in the hands of transferor. In other cases it is taxable in the hands of the receiver of the income.
I am not referring to the gift but income arising from it.


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register