l I fall in the 30% tax bracket. So can I transfer all my savings to my spouse as a gift and invest the same as a fixed deposit? Is there any limit on gifts to be considered as tax free in the beneficiary’s hands?—Ashok Sharma
Gifts received from specified relatives, including a spouse, are exempt from tax. However, as per Section 64(1)(iv), any income arising, directly or indirectly, from the transfer of an asset to a spouse shall be included in the transferor’s income, unless the transfer is made for adequate consideration or pursuant to an agreement to live apart. Hence, the amount transferred to your spouse shall be taxed in your hands under the heading “Income from Other Sources”. You need to pay tax on such interest income on fixed deposit.
l TDS of 1% is deducted when cost of the property is over Rs 50 lakh. My query is whether the sale consideration includes 5% GST charged by the builder while arriving at the cost of flat? —T V Mahadevan
Under Section 194-IA of the Income-tax Act, 1961, the buyer is required to deduct tax at source (TDS) at the rate of 1% on any sum paid as consideration for the transfer of immovable property, where the sale consideration exceeds `50 lakh. The term “consideration” shall include all charges incidental to the transfer of the property. The CBDT vide circular No. 23/2017, clarifies that TDS is not required to be deducted on the GST component. Therefore, where GST is separately indicated in the sale deed, TDS shall be deducted only on the sale consideration excluding the GST amount.
l My daughter plans to sell some gold jewellery that I had given to her at the time of her wedding 10 years ago and use it to buy land for house construction jointly with her husband. Will the sale proceeds be taxable?
As per Section 2(14), your daughter’s sale of jewellery will attract capital gains tax since jewellery is a capital asset, as it was gifted, the cost of acquisition will be your original purchase cost as per Section 49(1). Given the jewellery is held for more than two years, the gain will be treated as long-term capital gain (LTCG) taxable under Section 112. However, exemption can be claimed under Section 54F if the net sale consideration is invested in purchasing/constructing a residential house within the prescribed timelines, subject to conditions (e.g., not owning more than one house on the transfer date). The exemption is available even if the property is purchased/constructed jointly with her husband, provided her share of investment is determined.
The writer is tax partner, AKM Global, a tax and consulting firm. Send your queries to fepersonalfinance@expressindia.com