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Tax implications of gift dee

Mahesh (Asst. Company Secretary) (33 Points)

28 July 2012

What is the tax implications is Gift Deed executed for transfer of Equity Shares from Father to his son and is there any compulsion for registration of Gift Deed.

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2 Replies

CA Ashish Pathak (Employed at Cipla Ltd.) (2779 Points)
Replied 28 July 2012

Hello Mahesh, Section 56(2)(vii) of the Income Tax Act relating to taxability of gifts in hands of the receiver is not attracted in this case as gifts received from "RELATIVES" is exempt.

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CA Ashish Pathak (Employed at Cipla Ltd.) (2779 Points)
Replied 28 July 2012

Moreover it should be noted that as per section62 of the act, Income arising from the assets transferred shall not be clubbed in hands of the transferor (father) only if it is irrevocable transfer. Irrevocable transfer means assets transferred to any person not revocable during the life time of the beneficiary or transferee. Also transferor should derive no benefit from such income or assets. So In my view the registration of gift deed is of course must and it must incorporate above clauses in relation to irrevocable transfer.