Tax on gift of fixed assets

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Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2013 one of my friend receiving gift of building from NRI, any body tell me the rate of tax for this type transaction

CA Alexandar Gazi

CA Alexandar Gazi (Expert)
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04 May 2013 Mr/Ms Author,

The above gift is chargeable to tax in the hands of receipient under the head income from other sources provided stamp duty value of the building exceeded Rs.50,000.
The stamp duty value will be chargeable to tax. (Charging section 56 (2)(vii) of the Income Tax Act, 1961).

If stamp duty value of the building is Rs.10,00,000 on the date of gift, Rs.10,00,000 will be chargeable to tax in the hands of your friend.

There is no specific rate mentioned under section 56 (2)(vii).

The value will be included in the total income of your friend. Then tax would be calculated applying normal tax rate. For example, an individual (born on or after 01/04/1953) tax rate for the A.Y. 2013 -14 would be -

Income Tax Rate

1) Upto Rs. 2,00,000 Nil
2) Rs.2,00,000 - Rs.5,00,000 10%

3) Rs.5,00,000 - Rs.10,00,000 20%

4) Above Rs.10,00,000 30%

Education cess - (2% + 1%) = 3% on income tax.

Your friend will have to pay advance tax on total income (stamp value of building + other income, if any) in compliance with sections 208 to 211 of the Income Tax Act, 1961.

Thanks,

Alexandar Gazi

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 June 2013 The gift depends where is the situation of Fixed Assets. If it is outside India and the NRI gift you then there is no Tax as Indian Income Tax is applicable only in India. If the property is in India then the expert has given you the correct reply. This will be added to your other incomes and regular rate will be charged as income tax.

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