Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Gift tax

samrudhi karpate (CA Final Student) (37 Points)

27 July 2016

suppose A who is the uncle of B, gifts an immovable property to his nephew B and also making B's wife as the co-owner of the said property, will there be any tax implications in the hands of nephew's wife?? will she be regarded as the relative under income tax act??

Reply
Follow
Share

6 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 27 July 2016

Uncle of spouse is not covered in the definition of "relative" as per income tax act,1961. So, any gift being immovable property received from a person other than his/her relative is taxable u/s 56(2)(vii) if it is received without any consideration and fair market value of such property exceeds Rs.50,000.

Upgrade to CAclubindia Pro. Subscribe Now!

samrudhi karpate (CA Final Student) (37 Points)
Replied 27 July 2016

A is the uncle of B

property has been gifted to B in which B's wife is the co owner....

Then what are the tax implications??

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 27 July 2016

Since 'A' is not relative of B's spouse hence such gift shall be taxable under the head Income from other sources and will be exempt in the hands of B. To determine the taxable amount in the hands of wife we have to check the fair market value of such property and wife's share in property.

samrudhi karpate (CA Final Student) (37 Points)
Replied 28 July 2016

Thank you so much :)

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (171338 Points)
Replied 08 August 2016

Practical way to avoid paying/reduction of gift tax would be specify the percentage of shares in the Gift deed itself, like 90:10 or 80:20

Upgrade to CAclubindia Pro. Subscribe Now!

suresh (proprietor) (425 Points)
Replied 08 August 2016

Simply you can treat the joint name holder in the property as the coapplicant if her name is second by treating the first applicant as 100 % owner of the property. YOu can treat the second name holder as coapplicant without any ownership rights. Then no tax will be attarcted. Can show such an intention of the doner by making a seprate family agreement for showing such an intention.