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Want to gift my property to my nephew

erdeep (engineer) (309 Points)

31 October 2014

respected experts ,

i want to gift my property to my nephew . how will it affect my itr ? will it create any problem for me after gifting if he use that property for business purpose ? or should i sell him ? since i am not able to maintain that property right now and my nephew is very close to me thats why i decided to gift my property to him .

please share yours valuable knowledge .

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11 Replies

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 31 October 2014

No problem for your IT Return and as nephew is not relative as per definition of Income tax, it is taxable in the hands of Nephew if market value of such property exceeds Rs.50,000 as Income from other sources. If Donee is relative as per IT Rules it will affect your IT return as Income arise from such gift will be taxable in the hands of Transferor.

1 Like

erdeep (engineer) (309 Points)
Replied 31 October 2014

dear expert , he is my sister's son . doesn't he come under relative ?
if market value of property is 30 laks then how to compute tax ?

Mihir (Wealth Manager) (5293 Points)
Replied 31 October 2014

Give a PoA to your nephew to take care of the property on your behalf if you cannot maintain that property.

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erdeep (engineer) (309 Points)
Replied 31 October 2014

mihir sir :: i have decided to gift him , now i dont want to hold it .

and

he is my sister's son . doesn't he come under relative ? if market value of property is 30 laks then how to compute tax ?

Swami Ayyappa Nuli (TAX ADVISOR & CONSULTANT AT G.S.T SUVIDHA CENTER) (1372 Points)
Replied 31 October 2014

The following parties are come under the definition of relative as per IT Rules

1)Spouse of the Individual

2)Brother or sister of spouse or individual

3) Any Lineal ascendant or Lineal Discendant of Individual

4)Any Lineal ascendant or Lineal Discendant of spouse of the Individual

5)Spouse of such Lineal ascendants or descendants

If you write POA to your nephew still you will have a tax implication that transfer of income with out transfer of asset will attract clubbing provisions. If there will be no income out of such gift then no problem if you write Power of Attorney(POA) to your nephew

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Mihir (Wealth Manager) (5293 Points)
Replied 31 October 2014

Or you may gift the property in favor of your sister. Sister is a relative as per IT Act. There will be no tax on this transaction. Nephew is not a relative. Selling the property to the nephew will attract LTCG in your hands, and you will have to receive from him price not less than stamp value of the property.

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Vishal Goel (Chartered Accountant) (1688 Points)
Replied 23 February 2015

Hello,

Not agree with Mihir & Ayyappa

It will not be taxable in his(nephew) hand.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 23 February 2015

Relatives means

- Spouse of Individual

- Brother & Sister of Individual

- Brother & Sister of Spouse of Individual

- Brother & Sister of either of the parents of Individual

- Any Lineal ascendants or descendants of the individual

-Any Lineal ascendants or descendants of the spouse of the individual.

Brother & Sister (YOU) of either of the parents of Individual (NEPHEW). dat y it ll not be taxable in ur nephew's hand.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 23 February 2015

Clubbing provision not apply

Section 62 in the Income- Tax Act, 1995 (Irrevocable Transfer of Assets)

Where an asset is transferred to any person

1. by way of trust which is not revocable during the lifetime of the beneficiary, OR

2. in the case of any other transfer, which is not revocable during the lifetime of the transferee; then all income arising from such asset, shall be included in the income of the transferee and not in the income of the transferor. This shall apply only if the transferor derives no direct or indirect benefit from such income in either case.

Shalini (none) (105 Points)
Replied 23 February 2015

I agree with Mr.vishal, gift from maternal/paternal uncle is not taxable.. Only when the gift is given by nephew to his uncle it is taxable in hands of uncle. However income from such property will be clubbed in hands of donor in both the cases.