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Gift to relative instead of sale

Sivaramaraju G (Learner) (2398 Points)

08 August 2020

A person wants to sale property to his relative. if he sells capital will be applicable. instead of doing so
Can I tell them to write a gift deed for transfer of such property and in return they will trf through bank for that also if gift deed written then we can avoid tax.
I know gift is free of cost but here to avoid tax I want to say like that. can you guys please give me your opinions??

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4 Replies

annu Goyal (1102 Points)
Replied 08 August 2020

In Case of transfer of any capital assets as gift it will not consider as transfer under Income tax act, soo no capital gain arise in hand of transferror(Gift Giver) and in case of Receiving the Gift by relative then as per sec 56(2) (vii) it will exempt, means no tax liablity on both hand

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 09 August 2020

Inviting problem from tax department. Avoid this type of tax planning. (This type of Tax planning may chance to be considered as tax avoidance and subject to litigation).

Note: If you can litigate, than you can..

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Nidhi (Chief Accountant) (3150 Points)
Replied 17 September 2020

Can I show this transaction in such a way that it's looks like real....

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 17 September 2020

Yes, you can show this transaction in such a way, (there is a way)) that it's looks like genuine transaction. You have to consider all the relevant fact and circumstances, and do that transaction by the way which can be explanable at time of assessment...but it should be planed with proper Professional advice..

1 Like