Gift by huf to his co-parncers is allowable without tax
pooja dedhia
(Querist) 11 July 2012
This query is : Resolved
huf has transfer the cheque of amt rs 11 lacs to his co-parcers in love & affection
is above transaction will cover tax implication? if yes to whom it is payable? which section is support ?
ashutosh mishra
(Expert) 11 July 2012
Originally we had a Gift tax Act 1958 but with effect from October 1, 1998, gift tax got abolished and all the gifts made on or after the date were free from tax. But in 2004, Gift Tax was again revived partially and a new provision was introduced in the Income Tax Act 1961 under section 56 (2)which
now governs the matters of gift.
In the following case, the receiver will be exempt from applicable gift tax:
1.The gift being given by a blood relative, irrespective of the gift value
2. Immovable properties located outside the country
3. Gifts received from relatives on the occasion of marriage (including gifts received by daughter-in-law from parents-in-law; but excluding gifts received by son-in-law from parents-in-law)
4.Gifts received by way of a will and inheritance
5. NRIs gifting parents in India from their NRE account
Defining Relatives :The section goes on to define the term relative to ensure that there are no loop holes which could in turn lead to some sort of money laundering. The relations who would come under the ambit include :
1.Spouse of the individual
2 .Brother or sister of the individual
3. Brother or sister of the spouse of the individual
4.Brother or sister of either of the parents of the individual
5.Any lineal ascendant or descendant of the individuals
6. Any lineal ascendant or descendant of spouse of the individuals
7. Spouse of the Brother / sister of individual or brother/ sister of spouse of individual
Gifting Minors & Realty
Even gifts received by minors will be brought within the purview of taxes by means of clubbing of income, incase of both parents having taxable income, it will be clubbed with the parent who is earning the highest.
Real estate deals done for values lower than the rates fixed by state governments / local bodies will also be taxed. Here, the tax will be levied on the difference of amount between state government's rate and purchase price. The tax needs to be paid by the buyer of the property.
pooja dedhia
(Querist) 15 July 2012
what is the relative defination for the huf?
C. P. CHUGH
(Expert) 16 July 2012
Thankfully Finance Act 2012 has amended the law to include co-parcners of HUF in the list of relatives specified u/s 40. Pls go through the amended law and you will clear your apprehensions.
