Your Queries: Income Tax – You have to pay tax on stamp duty value of property gifted by stranger

December 9, 2020 3:30 AM

However, if any immovable property is received as a capital asset from any person other than a relative, without any consideration, and stamp duty value exceeds Rs 50,000, then such a transaction is liable to tax.

In the hands of the recipient, i.e., your teacher, the entire stamp duty value of the property on the date of gift will be taxable as income under section 56(2) under the head “Income from other sources”.In the hands of the recipient, i.e., your teacher, the entire stamp duty value of the property on the date of gift will be taxable as income under section 56(2) under the head “Income from other sources”.

By Chirag Nangia

I am employed in a private institute. I’d like to support my retired teacher who has no source of income/pension now by gifting her a house. My intention is to buy a land and then construct a house (with or without a house loan). Should I register all documents in my name till a gift deed is done on her name? If so, how will my income tax calculations be done until such a gift deed?
—Mala Karupiya
A house may be constructed and gifted to your teacher for providing assistance. All documents may be registered in your name until the completion of construction of house property and execution of gift deed. As per income tax provisions, any transfer of capital asset under a gift is not regarded as transfer and consequently there will be no capital gain in the hands of the transferor. However, if any immovable property is received as a capital asset from any person other than a relative, without any consideration, and stamp duty value exceeds Rs 50,000, then such a transaction is liable to tax. In the hands of the recipient, i.e., your teacher, the entire stamp duty value of the property on the date of gift will be taxable as income under section 56(2) under the head “Income from other sources”. Subsequently, if he/she transfers this property, then the stamp duty value on the date of gift will be taken as the cost of acquisition of this property in her hands.

My husband has invested in Senior Citizen Savings Scheme in my name and pays income tax on the interest. How do I report this investment in my name in my ITR? How should I report the interest in my ITR as I understand it will be considered as my income though tax is paid by my husband under clubbing of spouse’s income?
—Padma Viswanathan
The investment made by your husband in your name shall be treated as a gift. As per I-T Act, a gift received from a relative is exempt in the hands of the transferee. You shall be required to disclose the amount of investment as exempt income in schedule EI of the ITR form. The interest income received on account of investment in SCSS that shall be clubbed in your husband’s total income. Your husband shall have to disclose the clubbed income in schedule SPI of the Income Tax Return Form. You shall not be required to disclose the income so clubbed.

The writer is director, Nangia Andersen Consulting. Send your queries to fepersonalfinance@expressindia.com

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