Gift from parents Private Limited Firm

Gift from parents Private Limited Firm

Hi All,

My father in law (Indian resident) is a partner in one of the Private Limited Real estate firms in India which does small real estate ventures like layouts and apartments constructions etc. We are residing in in USA ( on VISA, do not have green card yet) and we are figuring out ways how my father in law can gift some portion of the real estate firm partnership to my wife. Please note that we (my wife or me) do not have any investment in the company. I understand that there are many limitations on how we invest money in India, but here the case is different. Can you please help with below questions? Appreciate your help.
My wife being NRI, what are the regulations and terms to receive the gift in this real estate private limited firm?
what are the tax implications ?
Does it need any prior approval from RBI or any other agency?
Do we have any better way to receive the partner ship instead of receiving it as gift?

Thanks Much!
Vinay
Email - [deleted]

Asked 5 years ago in Income Tax

Hello Sir,

It is better to receive the same through gift deed.

There would be no tax liability on gift received from relatives.

Karishma Chhajer

CA, Jodhpur

2452 Answers

29 Consultations

Talk to Karishma Chhajer

Hi Vinay

It needs to be determined first as to what's the objective. Whether money is to be kept in India or taken outside... If in India, whether to be kept in same company or not...

Accordingly it could be decided whether gifting shares would be beneficial or gifting money after selling father's shares in the company.

We may discuss the issues further.

Lakshita Bhandari

CA, Mumbai

5687 Answers

942 Consultations

Talk to Lakshita Bhandari

Basically your wife wants a share in the private limited company.

That can be done by having a board meeting in the company passing the resolution for such transfer and later making a gift deed evidencing such transfer. An nri can be a share holder and since she is not bringing any money it should not be a problem also when receiving a gift from father it won't attract any tax.

However there can be a issue when taking money from such company by the daughter at the time of dissolution.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo

CA, Jaipur

4303 Answers

101 Consultations

Talk to Naman Maloo

Hello,

The gift of share is permitted to be transferred by a resident to an NRI. There would be no tax liability under Income Tax since the gift would be between relatives.

Whether it is a partnership Firm or a Private Limited Company since you have used both terms in the query.

Gifting of the share would be a better option with no tax implication, just RBI approval or satisfaction of conditions might be required.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani