My father had a property jointly with my grandfather. My father sold of the property for 40 lacs. 20 lacs was received by my father and 20 lacs by my grandfather. Can my grandfather gift that 20 lacs to my father so that my father is able to purchase a property in future? Will my grandfather be taxed if he gives that money to my father? Also, will my father be taxed on the money received by him from his grandfather?
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Income Tax On Gifted Items
Replies (2)
Q.1: Yes. your grandfather can gift his share to your father, but after paying capital gains tax on the proceeds. Once that is done, then he is free to apply the remaining income as he pleases. Of course this will not apply if the property is not a capital asset (meaning agricultural land beyond 8 km from any urban area. See Section 2(14)),
Q.2: In view of the above, no further tax on either of them on that amount (excluding any income derived from such gifted amount).
I am of a different opinion as regards the purchase of Agriculture Land for claiming exemption U/s 54B.
It can be applied for purchase of Agriculture Land.
The act does not make here any distinction of rural land or urban land.
Any land which must be "Agriculture Land" can be purchased.
I hope Member will Manage to agree with me.
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