Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Gift transaction taxable or exempted

Kollipara Sundaraiah (B.com) (2986 Points)

05 November 2022

It assessess (brother) own immovable property gift to sister's son after another date sister's own immovable property gift to brothers son .
question:
above mentioned two gift transactions taxable or exempted in it act.

Reply
Follow
Share

3 Replies

sabyasachi mukherjee (27579 Points)
Replied 06 November 2022

Three pertinent points are essential
1. The gift is given to whom?
2. the gift is given in blood relation.
upto 50000 it's not taxable.

Upgrade to CAclubindia Pro. Subscribe Now!

Kev Men (788 Points)
Replied 06 November 2022

Both the above transactions will be taxable as sister's son and brother's son do not come in the definition of relative as per the explanation to section 56.

However gift to brother or sister will be exempt as brother or sister is within the definition of relative.

Hence the brother can gift to sister and then the sister can gift to her son in the first case to avoid tax.

Similarly the sister can gift the 2nd property to brother and then the brother can gift it to his son to avoid tax in the 2nd case.

However proper procedures relating to registration of gift, etc. needs to be done.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (178371 Points)
Replied 06 November 2022

In both the cases the gifts received will be EXEMPT u/s. 56(2)(x)(b) read with explanation of 'relative' as written down below...

Gift received from a relative is not taxable in hands of the recipient under section 56 of Income Tax Act. The persons who are considered as relatives are

In case of an individual