Gift made to Daughter....

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Sumiti Jain (Querist)
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07 February 2011 A person has received a sum of money from the sale of his shop, now he wants to make a gift to his daughter with that sale proceeds. This gift is made other than an occasion of her marriage.

What is the treatment in the hands of that person of such sale proceed? Whether he has to pay tax on the total amount recd. less cost or on the amount left from the deduction of amt. of gift.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 February 2011 1. Sale of Shop:

He has to pay tax on Capital Gains arising on sale of shop. It depends upon period of holding. In case it is held for more than 3 years then shop will be a long term capital asset and the seller is allowed indexation benefit in such cases.

In short first the person has to pay tax on Capital Gains or Profits. He may save taxes also by making investment.

2 Gift to Daughter
He can gift any amount to his daughter at any point of time . Only thing to be kept in mind that if the daughter is unmarried and minor , income arising from gifted money will be added back in the hands of the father or mother, who ever is having higher income.

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Sumiti Jain

Sumiti Jain (Querist)
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07 February 2011 Daughter is married, now will the full amt arise from the sale of the shop after deduction of indexed cost be taxed in the hands of the Assessee?

CA Jeen paul

CA Jeen paul (Expert)
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07 February 2011 indexation benifit can be availed if it is a long term capital asset ie., held for not less than 3 years fro the date of aqusition.less the transfer expenses like commission ect.
in case married daughter the income araising on gifted amount will not be taxed in your hands

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 February 2011 Daughter is married, now will the full amt arise from the sale of the shop after deduction of indexed cost be taxed in the hands of the Assessee?

Yes the amount will be taxed.
Capital Gains Tax can not be saved by gifting the amount to married daughters. It can be saved either by investing in residential house or in Capital gain bonds by following underlying conditions.

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