TAX ON GIFT FROM GRANDFATHER
Rohan Shetty
(Querist) 02 July 2011
This query is : Resolved
My name is Rohan.
My grandfather Mr. B.S Naik. Is a well reputed individual.
the gift deed is already registered in november 2010 .... i cannot afford the taxes .... since i am still a student .....
refer the following
(My grandfather) B.S Naik is approx 82 years old and is a bachelor till date! He bought My Mom to Mumbai from Manglore and good took care of her ,educated her and made her an independent individual . Post my mom got married to my dad ,still we stayed with my Grandfather, Mr. B.S Naik. My mom had two kids. I am the elder to my sister who is 21 years old.
My dad is absconding since 2005 July and my mom is working for a reputed organisation and has abandoned us since long!
Now my grandfather who is my moms maternal uncle (Mama) has taken care of our upbringing and is the only one who has taken care of us since our birth. (our-me and my younger sister)
November 2010 he gifted his property(house) approx value 70 lakh to me and my sister with 50-50 stake each, Just to avoid and claims on his will. This is a decision taken by him!
Now I was highlighted that I am eligible to couple of taxes!
Gift tax and income tax!
Could any one please throw some light on this issue –
As i was informed that “my grandfather is not a relative to me as per law” and i would be eligible for 30% tax of the property value!
If yes is there a solution as i am just a student and i am going through tremendous stress post realisation!
The transfer is registered through a gift deed and is completed under the guidance of a professional lawyer who did not inform about any tax or complications!
Contact me on 9619000104 or rohansshetty@gmail .com
I am unaware about the policies and procedures in this site ... please pardon me if i have broken any policy of this site!!!
R.Ramachandran
(Expert) 02 July 2011
He can make an appropriate Registered Will in your and your sister's favour. The WILL would become effective only after the life time of your Grandfather Mr. Naik. I think it should be OK for you. Since he is a bachelor, and no other siblings would stake any claim or challenge the WILL. Even if any challenge is laid to the WILL, it can be successfully defended. According to me, the WILL route is desirable in your case. Otherwise the GIFT route will definitely involve not only stamp duty and registration charges (which itself will be quite high), apart from the attendant income tax liability.
M/s. Y-not legal services
(Expert) 02 July 2011
Will is better choice than gift deed for escaping from tax liabilities. But why people you are trying to escape from tax. While you getting gain, whats your problem to pay tax.? Try to be a good citizen.
R.Ramachandran
(Expert) 02 July 2011
Dear Tom,
We cannot jump to the conclusion on tax matters. While Tax 'evasion' is not advisable, tax 'avoidance' within the four corners of law is every one's right. If by adopting the "WILL" model one can avoid tax it should be OK. Still one will be a good citizen.
Rohan Shetty
(Querist) 02 July 2011
Sir !
I appriciatee your reply to my concern .... but the issue is the property value is decent and it is not a monatry gain as such ... it is the house i am staying in .... i am still a student and the tax amout is way beyond my reach ! it may even range upto 30 lakhs and I am a student .its not the question of beein a good citizen. its being practical ... as i have been born and bought up by my grandfather ! my parents have kinda abandondend us.....actually neglected is the word ... i dont mind paying a nominal tax ..i have payed the gift tax and the stamp duty and registrations etc .... the income tax is what is bothers me!
A V Vishal
(Expert) 02 July 2011
Mr Rohan
Clarify by meaning of gifted, do you mean he has transferred it through a registered gift deed or just written a will bequeathing the same. In former case the tax liability arises immediately, however, in the latter case things differ.
Rohan Shetty
(Querist) 02 July 2011
Gift deed : he has transfered it throught a registered gift deed !
prabhakar singh
(Expert) 02 July 2011
then with what object u asked us2 exercise....
A V Vishal
(Expert) 02 July 2011
Rohan,
In such case tax liability arises immediately. The newly inserted provisions of section 56(2)(vii) have been made applicable from 1st October, 2009 in case the property is received by any individual or a HUF.
These provide –
a) Where immovable property or any other property is received without any consideration and the stamp duty value (in case of immovable property)/ fair market value (in case of any other property) of such property exceeds Rs.50,000, the entire stamp duty value or fair market value (as the case maybe) of such property would be taxable as income from other sources.
b) Where immovable property or any other property is received for a consideration and such consideration is less than the stamp duty value (in case of immovable property)/ fair market value (in case of any other property) of the property by an amount exceeding Rs.50,000, the stamp duty value/ fair market value reduced by the consideration received, would be taxable as income from other sources.
Consult a good practising tax consultant or a chartered accountant who can sort out the issue.
