A father has given a property as gift to the son. Son has further sold the property and purchased a new property.
1. Sale of gifted property would be taxed in whose hands.
2. Whether gift deed plays an important role in such transactions.
3. In case sale would be considered in son's hands, what can be considered as cost of acquisition.
4. Stamp duty should have been levied on transfer of property as gift.
1. Taxation of Sale of Gifted Property The sale of the gifted property would be taxed in the son's hands: - _Section 56(2)(vii) of the Income-tax Act, 1961_: Exempts gifts from taxation in the hands of the recipient (son). - _Section 45 of the Income-tax Act, 1961_: Taxes capital gains arising from the transfer of a capital asset (property) in the hands of the transferor (son).
2. Role of Gift Deed The gift deed plays a crucial role in such transactions: - _Establishes ownership_: The gift deed establishes the son as the owner of the property. - _Determines cost of acquisition_: The gift deed helps determine the cost of acquisition for the son (more on this below).
3. Cost of Acquisition In the son's hands, the cost of acquisition can be considered as: - _Nil or nominal value_: If the gift deed mentions a nominal value or no consideration, the cost of acquisition may be considered as nil. - _Stamp duty value_: If the gift deed mentions a stamp duty value, this can be considered as the cost of acquisition. - _Fair market value_: In some cases, the fair market value of the property at the time of the gift may be considered as the cost of acquisition.
4. Stamp Duty on Gift Stamp duty should have been levied on the transfer of property as a gift: -
_State-specific stamp duty laws_:
The applicable stamp duty rate varies depending on the state where the property is located. - _Gift deed should mention stamp duty_: The gift deed should mention the stamp duty paid or payable on the transfer of the property.
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