Property gifted to mother for a negligible amount of Rs 5 lakh would not amount to as gifting, the Rajkot Bench of the Income Tax Appellate Tribunal (ITAT) has ruled. In its order dated November 16, 2022, the ITAT has also clarified that such a transaction would qualify as sale and not gifting, and attract capital gains tax in the hands of the recipient.
A property exchange between two parties would qualify as gifting only when there is no exchange of money for the transfer. In case of exchange of money, the transfer would be a sale, and should be executed through a sale deed.
Giving its order in the Jay Atulbhai Mody versus ITO case, the Bench said that the amount received by the mother would be treated as capital gains under Section 54 of the income tax act.
While stamp duty payment on gift deeds is entirely exempted from stamp duty payments in some states, property gifting to certain specified relatives is fully exempt from tax in the hand of the recipient. The list of close relatives includes parents, spouse, siblings, siblings of the spouse, lineal ascendants and descendants of the person and his/her spouse. The list also includes spouses of the above mentioned persons.
See also: Gift deed on stamp duty
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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