I'm an NRI and would like to gift my immovable property (flat) in India to my mother (residing in India) in terms of a gift deed. I heard that gift to a relative in tax exempt. However, I found the following definition of 'relative' according to Income Tax Act - "spouse, brother and sister of self and spouse, brother or sister of parents or parents in law, any lineal ascendant or descendant of self or spouse". I have the following questions: 1) The term "Lineal ascendant or descendant" means grandfather, father, son, grandson etc. It does not mean mother in specific. So, does the definition of 'relative' also include 'mother'? If yes, how? 2) Will gifting the property to a relative (my mother in my case) be completely tax exempt irrespective of the value limit? 3) Is it also completely tax exempt to gift money irrespective of the value limit to a relative?
Hi
You would be considered as a relative for your mother for income tax purposes. The gift would be tax exempt, whether be it in any form- property or cash.
For gifting property to your mother, registration shall have to be done which would involve stamp duty payment.
1. Yes it includes mother also.
2. Yes it is completely tax exempt as gift is between the relatives.
3. Yes subject to definition of relative as per Income tax Act.
4. Draft a proper gift deed and get it registered. Also mention the same in the property documents.
I have two follow-up questions: 1) If my mother sells the property after that, will her income from the sale be clubbed to my income? I mean, will it be looked upon as my income as well? 2) Since I won't be able to come to India, I'll be authorising my sister to do the registration of the gift deed on my behalf. Will that still be considered as a gift even on my absence?
1) No, capital gain will be taxable in her hand. Your holding period and cost would be considered while calculating the capital gain.
2) Execute proper power of attorney for this purpose. It will be treated as gift.
For detailed discussion, you may consider a phone consultation.
1. It wouldn't be clubbed with your income. Your mother will have capital gains income.
2. It would be considered as gift.
Hello,
Your mother would be covered in the definition of relative and a gift to her would be tax-exempt, be it property or cash, irrespective of the value.
I hope this answer satisfies your requirements. For a detailed resolution of your query, you can contact us directly at badlaniassociates at Gmail or take a phone consultation.
Regards,
CA Hunny Badlani
Badlani & Associates
1. No, it won't be clubbed in your income. Your mother would be liable to pay tax on it. Your cost of acquisition and period of holding would be considered in calculating the net capital gain and tax on it.
2. Power of attorney would be required.
Yes mother will be covered under the definition of lineal ascendant and hence will be considered as relative and no tax on same.
Yes it will be completely exempt.
Yes gifting money is also exempt irrespective of limit.
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