Taxability in the hand of company and trust if a company tra
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 February 2015
Good Evening all !!
Plz tell me about the taxability in the hand of company and trust if a company transfer its land by way of gift to a trust.also tell me about any tax planning in this case
Thanks in advance
Plz tell me about the taxability in the hand of company and trust if a company transfer its land by way of gift to a trust.also tell me about any tax planning in this case
Thanks in advance
03 February 2015
Company can get tax benefits up to 50% of value of gift u/s 80G if donation given to charitable trust registered u/s 12AA of income tax and approved u/s 80G.
See the link for more details.
http://www.investmentyogi.com/taxes/tax-deduction-under-section-80g-for-donations-towards-social-causes.aspx
See the link for more details.
http://www.investmentyogi.com/taxes/tax-deduction-under-section-80g-for-donations-towards-social-causes.aspx
03 February 2015
its not cover the things only money tfr. will cover.
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 February 2015
Thanks for reply!!
Any other better way of transfer ???
Any other better way of transfer ???
26 July 2025
Hey! Here’s a clear breakdown regarding the **taxability when a company gifts land to a trust**, plus some tax planning ideas:
---
### 1. **Taxability in the Hands of the Company (Donor)**
* When a **company transfers land by way of gift to a trust**, it is considered a **capital asset transfer**.
* **Section 47** of the Income Tax Act lists transactions not regarded as transfer. But gifting land to a trust **is generally considered a transfer** and will attract **capital gains tax**.
* The company will have to pay **capital gains tax** on the difference between the **fair market value (FMV)** of the land and its **cost of acquisition**.
* If the trust is **charitable and registered under Section 12AA**, and the company gets a donation receipt, then the company can claim a deduction under **Section 80G** only **if it is a donation in money**. **Gifts in kind (like land) do NOT qualify for deduction under Section 80G.**
---
### 2. **Taxability in the Hands of the Trust (Donee)**
* If the **trust is registered under Section 12AA** and is a charitable trust, **income from gifts received (including land)** is **not taxable** if the trust applies the property for charitable purposes.
* The trust will have to maintain proper records and apply the asset for charitable use to avail tax exemption.
---
### 3. **Tax Planning / Alternatives**
* Since gifting land results in **capital gains for the company** and **no 80G deduction on land gifted**, consider these alternatives:
**a. Sale at Fair Market Value to Trust:**
* The company sells the land at FMV to the trust.
* The trust pays for the land in cash or by cheque.
* The company recognizes capital gains but can plan using exemptions under **Section 54** or **54EC** (if applicable).
* The trust gets clear ownership.
**b. Lease Instead of Gift:**
* The company leases the land to the trust for nominal rent.
* No capital gains on gifting, and the trust can use land without ownership issues.
**c. Create a Joint Venture or Use Land as Contribution:**
* Company and trust enter into a joint venture where land is contributed.
* Complex but can be planned to defer or reduce tax impact.
---
### Summary:
| Aspect | Taxability / Treatment |
| ------------------------------------ | --------------------------------------------------------------- |
| Company gifting land to trust | Capital gains tax on company (transfer of capital asset) |
| Company claiming deduction under 80G | Not allowed for gifts in kind (like land) |
| Trust receiving land | Exempt if registered charitable trust and land used for charity |
| Tax planning alternatives | Sale at FMV, lease, joint venture, or using exemptions |
---
If you want, I can help draft a detailed tax planning note or explore JV/lease options for you. Would you like that?
---
### 1. **Taxability in the Hands of the Company (Donor)**
* When a **company transfers land by way of gift to a trust**, it is considered a **capital asset transfer**.
* **Section 47** of the Income Tax Act lists transactions not regarded as transfer. But gifting land to a trust **is generally considered a transfer** and will attract **capital gains tax**.
* The company will have to pay **capital gains tax** on the difference between the **fair market value (FMV)** of the land and its **cost of acquisition**.
* If the trust is **charitable and registered under Section 12AA**, and the company gets a donation receipt, then the company can claim a deduction under **Section 80G** only **if it is a donation in money**. **Gifts in kind (like land) do NOT qualify for deduction under Section 80G.**
---
### 2. **Taxability in the Hands of the Trust (Donee)**
* If the **trust is registered under Section 12AA** and is a charitable trust, **income from gifts received (including land)** is **not taxable** if the trust applies the property for charitable purposes.
* The trust will have to maintain proper records and apply the asset for charitable use to avail tax exemption.
---
### 3. **Tax Planning / Alternatives**
* Since gifting land results in **capital gains for the company** and **no 80G deduction on land gifted**, consider these alternatives:
**a. Sale at Fair Market Value to Trust:**
* The company sells the land at FMV to the trust.
* The trust pays for the land in cash or by cheque.
* The company recognizes capital gains but can plan using exemptions under **Section 54** or **54EC** (if applicable).
* The trust gets clear ownership.
**b. Lease Instead of Gift:**
* The company leases the land to the trust for nominal rent.
* No capital gains on gifting, and the trust can use land without ownership issues.
**c. Create a Joint Venture or Use Land as Contribution:**
* Company and trust enter into a joint venture where land is contributed.
* Complex but can be planned to defer or reduce tax impact.
---
### Summary:
| Aspect | Taxability / Treatment |
| ------------------------------------ | --------------------------------------------------------------- |
| Company gifting land to trust | Capital gains tax on company (transfer of capital asset) |
| Company claiming deduction under 80G | Not allowed for gifts in kind (like land) |
| Trust receiving land | Exempt if registered charitable trust and land used for charity |
| Tax planning alternatives | Sale at FMV, lease, joint venture, or using exemptions |
---
If you want, I can help draft a detailed tax planning note or explore JV/lease options for you. Would you like that?
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