Gift if money to relative to buy house
This query is : Resolved
29 March 2012
Money is gifted by an individual to his relative to buy house. The house is registered in the name of the relative. Now th e relative lets ou the house on rent of rs. 45000 per month. In whose income will this rent be cOnsidered? The individual or his relative?
Moreover what will be the effect in the following throw situations combined with the above facts:
The rent is deposited in the individual's account
Or
The rent is deposited in the relative's account
Moreover what will be the effect in the following throw situations combined with the above facts:
The rent is deposited in the individual's account
Or
The rent is deposited in the relative's account
29 March 2012
Ms. Sonal,
The rent income will be taxable in the hands of the relative only. As, the house is also in the name of the relative and amount of the gift received is exempt from tax.
Hence, the property is beneficially and legally owned by the relative and income wud be taxed in his/her hands.
The answer will remain the same in all the above situations.
The rent income will be taxable in the hands of the relative only. As, the house is also in the name of the relative and amount of the gift received is exempt from tax.
Hence, the property is beneficially and legally owned by the relative and income wud be taxed in his/her hands.
The answer will remain the same in all the above situations.
29 March 2012
Wouldn't the rental income be considered as income arising out of gift and hence chargeable in the hands of the individual .
29 March 2012
Understand the transactions:
1. Gift
Gift is exempt in the hands of the receiver.
2. The relative purchases a house from such cash gift.
Now we have to see who is the relative.
If the relative is the spouse of the individual or a minor son, then clubbing provisions will be attracted and the income shall be clubbed with the income of the individual.
If the relative is a person other than the above persons, then clubbing provisions shall not apply and the income shall be taxable in the hands of the relative only.
1. Gift
Gift is exempt in the hands of the receiver.
2. The relative purchases a house from such cash gift.
Now we have to see who is the relative.
If the relative is the spouse of the individual or a minor son, then clubbing provisions will be attracted and the income shall be clubbed with the income of the individual.
If the relative is a person other than the above persons, then clubbing provisions shall not apply and the income shall be taxable in the hands of the relative only.
29 March 2012
Please read section 27 and 64 for the detailed understanding.
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