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Gift to relative instead of sale

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Sivaramaraju G

Learner

1307 Points Posted on 08 August 2020

A person wants to sale property to his relative. if he sells capital will be applicable. instead of doing so
Can I tell them to write a gift deed for transfer of such property and in return they will trf through bank for that also if gift deed written then we can avoid tax.
I know gift is free of cost but here to avoid tax I want to say like that. can you guys please give me your opinions??

Replies (4)

Quick Summary

This discussion explores the tax implications of transferring property to a relative. While selling property incurs capital gains tax, a gift deed might avoid this for the giver. However, the recipient may still face tax implications under Section 56(2)(vii) of the Income Tax Act, though gifts between specified relatives are typically exempt. The consensus is that while such arrangements can be structured to appear genuine, it's crucial to seek professional advice to avoid potential tax avoidance issues and litigation.

annu Goyal

641 Points Posted on 08 August 2020

In Case of transfer of any capital assets as gift it will not consider as transfer under Income tax act, soo no capital gain arise in hand of transferror(Gift Giver) and in case of Receiving the Gift by relative then as per sec 56(2) (vii) it will exempt, means no tax liablity on both hand

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 09 August 2020

Inviting problem from tax department. Avoid this type of tax planning. (This type of Tax planning may chance to be considered as tax avoidance and subject to litigation).

Note: If you can litigate, than you can..

Nidhi

Chief Accountant

1673 Points Posted on 17 September 2020

Can I show this transaction in such a way that it's looks like real....

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 17 September 2020

Yes, you can show this transaction in such a way, (there is a way)) that it's looks like genuine transaction. You have to consider all the relevant fact and circumstances, and do that transaction by the way which can be explanable at time of assessment...but it should be planed with proper Professional advice..