GIFTING OF PROPERTY

Querist : Anonymous (Querist) 26 December 2009 This query is : Resolved
DEAR SIR ,

MY REAL SISTER( A GOVT SERVANT) PURCHASED A RESIDENTIAL PROPERTY IN PUNJAB IN YR 2005. THE ENTIRE LOAN HAS BEEN REPAYED WITHIN THREE YEARS AND NOW THE PROPERTY IS FREE FROM ANY MORTGAGE. SHE WANTS TO GIFT ME THE SAID PROPERTY . MARKET VALUE OF THE PROPERTY IS APPROX 13 LACS. PLEASE INTIMTATE IF SHE CAN GIFT ME THIS PROPERTY ?.

MY QUERY IS;-
A] CAN THE CONSIDERATION VALUE BE SHOWN AS ZERO . AND RELATED STAMP DUTY ON RS 13 LACS , TO THE GOVT CAN BE PAID BY ME ?

B] MY TAX LIABILITY AND ANY INTIMATION REQD TO BE GIVEN TO THE IT DEPTT?

C] WHETHER I CAN SELL MY PROPERTY AT LATER STAGES, AFTER RECEIVING IN GIFTED FORM AND MY CG TAX LIABILITY ON SALE OF THIS GIFTED PROPERTY.

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A V Vishal (Expert) 26 December 2009
A gift by your natural sister is out of love and affection, there has to be no consideration for it, however, for purpose of stamp duty the existing market value is considered. The stamp duty can be borne by you.

There are certain provisions and important points which we will discuss in this post. Gift can be received by the following ways.

From Relatives
Relative means:

Spouse
Brother or sister
Brother or sister of the spouse
Brother or sister of either of the parents of the individual
Any lineal ascendant or descendent(A lineal descendant is a person who is in direct line to an ancestor, such as child, grandchild, great-grandchild and on. Similarly, a lineal ascendant is parent, grandparent, great-grandparent and so on.)
Any lineal ascendant or descendent of the spouse
Spouse of the person referred to in (2) to (6) Some tests when receiving gift from relatives

Thus, a gift received by an individual from his spouse, or from his brother or sister, or from the spouse's brother or sister, parents, or from any lineal ascendant or descendant of oneself or one's spouse would normally be fully tax-exempt. Similarly, any gifts of any amount whatsoever received from the spouses of any of these persons would also be completely exempt from income tax.

For example, if Mr. X receives a gift of Rs. 3,00,000 in cash from his brother-in-law, that is, his spouse's brother, it would be exempt since the brother or sister of the spouse comes within clause (3) of the aforesaid explanation.

Hence, whenever you receive any gifts from relatives you must carefully apply the test to ascertain whether the person concerned falls within one of the seven categories as above referred.