Transfer by Gift deed is not taxable

Transfer by Gift deed is not taxable

Gifts transactions are not taxable in the hands of the donor. For a donee, the gift deed transfer is taxable, but there are exceptions. 

Gifts are prevalent among family members or close relatives. It is one way of expressing love and affection. People also make gifts to save taxes as some of the Gift transactions are fully exempted from taxation.

Read More: Property Disputes Among Siblings

A person may gift any of the following:

A person may be an individual, HUF or an artificial juridical person like a company/firm. 

In India, we had a Gift Tax Act under which tax was levied on the gift. The donor had to pay the tax. But the said legislation was abolished. Now a provision has been made in the Indian Income Tax Act 1961, for taxing the gift transactions. The recipient of the gift has to pay tax. 

Read More: SC Guidelines For Court Hearings Through Video Conferencing Due To COVID 19

The gift transaction is tax-free under certain circumstances: 

Gift of Cash:

If the aggregate value of the cash received in gift exceeds Rs 50,000 in a financial year, the recipient has to pay the tax on the amount received. The said amount is counted as his income under the head Income from other sources.

Read More: Tax for NRIs on gifts of money and property

Gift of property:

  • The gift deed of immovable property has to be registered. The stamp duty is paid at the time of registration based on the market value of the property. The stamp duty payable differs from state to state.
  • If the property is received as a gift without consideration, the recipient pays the tax if the stamp duty value of the property exceeds Rs 50,000/-.
  • If the property is received without adequate consideration, the recipient pays the tax if the stamp duty value exceeds consideration amount by Rs 50,000/-. 
  • In the case of moveable property like shares, jewellery, etc., the recipient pays the tax if the fair market value of the property exceeds Rs 50,000/-.

Read More: Useful Tips To Transfer A Property

Some gifts are tax-free:

  • Any amount of gift if received from the relatives as defined in the Income Tax Act. A relative is specified in the Act and can be the spouse, sibling, sibling of the spouse, sibling of either parent, etc.
  • For NRIs and PIOs, the rules of FEMA will also apply. The definition of relatives is narrower under FEMA. For NRIs as a recipient, rules of remittance have to be kept in mind. The resident Indian who wants to gift an amount to an NRI, the said amount cannot exceed the permissible limits of remittance. 
  • Gift received on the occasion of marriage.
  • Gift received under Will or inheritance
  • Gift on the contemplation of death of the donor
  • Gifts received from any fund, foundation, medical institution, educational institution or university, or any charitable or religious trust. Gifts received from any person by the said institutions are also exempted. Such foundation, institution etc. must be registered under the Income Tax Act.

A person can use provisions relating to gifts for tax planning. These are certainly not meant for evading taxes. 

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Division of Property Among Daughters and Daughters-In-Law

Division of Property Among Daughters and Daughters-In-Law

Daughters and daughter – in – laws are on different footing when it comes to shares they receive on division of property in a family. Devolution of property by inheritance or succession is influenced by personal laws and is governed by various statutes.

Position of daughters: Equal right as a son

In the case of Hindus (Jains, Sikhs and Buddhists) division of property is governed by Hindu Succession Act, 1956.

Hindu law recognises the concept of a Hindu Undivided family. Only males up to four generations (lineal descendants from a common ancestor) are coparceners, and all others are members of the family. After the amendment of 2005 in the 1956 Act, daughter whether married or unmarried is a coparcener. After marriage, daughter ceases to be a member of father’s HUF but still, she is a coparcener. A daughter has the rights and liabilities of a coparcener.

  • She can demand partition, has a birthright in the undivided family property.
  • She can be a Karta also, i.e. head of the family if she is the eldest coparcener.
  • If the daughter dies intestate, her share in the HUF property passes by succession to her legal heirs as per section 15 of the 1956 Act.
  • A daughter is a coparcener but a daughter in-law is only a member of joint family.

In case of self-acquired property of the father, son or daughter has no birthright in the same. If the father dies intestate, devolution of property takes place as per rules of 1956 Act under which daughter is covered as Class I heir and has an equal right along with son and other legal heirs.

Read: Do grandchildren have a right to their grandfather’s property?

Daughters also have a share in mother’s property. Daughters and sons have equal rights in the property of their mother.

Position of daughter- in- law: Limited Rights

A daughter in law has no right in the ancestral or self-acquired property of her in-laws.

After the death of her husband, i.e. as a widow, she has the right in her husband’s property left behind by him. This property can be either ancestral or self-acquired. The right acquired by her is as a widow of the deceased husband.

Thus if a father dies intestate, a daughter has an equal right in his property along with her brother, but the daughter in law has no right in the property of her father- in law till the time her husband is alive. After the death of her husband, she is entitled to get the share in the property of her husband along with his other legal heirs.

Read: Property rights of a daughter in a hindu family

The daughter in law has a right to residence only till the time matrimonial relationship exists with her husband. The right of residence is there even if the house is a rented accommodation. If the property is a self-acquired property of her father in law, daughter in law has no right of residence as the said house is not shared house because the husband has no share in it.

A widowed daughter in law has right of maintenance from her father in law under certain conditions only, as prescribed in Hindus Adoption and Maintenance Act, 1956.

Division of property:

When there is a division of property in a joint Hindu Family, the daughters enjoy equal right along with sons. The daughter in law has no right in the property of her in-laws. She acquires rights to the in-law’ property only through her husband.

The daughter in one family becomes daughter in law in another family after her marriage. She has full rights in the property of her father even after marriage but limited rights in the property of her in-laws.

Property law in India for daughters

Property law in India for daughters

The property laws for daughters and sons were different until the Hindu Succession Act, 1956, but were amended in 2005. Earlier, the sons had complete power over the father’s property. Daughters enjoyed the property right only till they got married. After marriage, a daughter was considered a part of her husband’s family.

Hindu Undivided Family (HUF)

Under the Hindu law, a HUF is a group including more than one person, all lineal descendants of a common predecessor/ancestor. The term HUF is supposed to apply to by people of Hindu, Jain, Buddhist, or Sikh faith. Currently, the laws keep the daughters in consideration and take care of their interests too.

Laws favouring daughters in their fathers’ properties:

Daughters’ rights in Hindu Succession Act, 2005

  • Earlier when a daughter got married, she discontinued being part of her father’s HUF which was seen by many as curtailing women’s property rights.
  • On 9/9/2005, the Hindu Succession Act, 1956, which governs the transference of property among Hindus, was altered.
  • According to the above Act, every daughter, whether married or unmarried, is now considered a member of her father’s HUF. She can even be appointed as ‘karta’/manager of father’s HUF property.
  • The amendment now provides for such laws that give daughters the same rights, duties, disabilities and liabilities that were earlier limited to sons.
  • However, a daughter can avail the benefits granted by the amendment only if her father passed away after 9/9 2005.
  • Moreover, the daughter is eligible to be a co-sharer mainly if the father and the daughter were alive on 9/9/ 2005.
  • Equal right to be coparceners
  • A coparcenary includes the eldest member of a family and three generations.
  • Earlier, it was said to include a son, father, a grandfather, and a great-grandfather.
  • Now women of the family can be a coparcener as well.
  • The coparceners obtain a right by birth over the coparcenary property.
  • A member of the coparcenary can further sell his /her share in the coparcenary to a third party.
  • A coparcener can file a suit asking partition of the coparcenary property but not a member.
  • Thus, a daughter, as a coparcener, can now demand the partition of her father’s property/business/house.

Muslim Law

Quranic laws of inheritance are extraordinarily specific. As per Muslim Law, daughters have right to maintenance and shelter in their parent’s house till they get married. Under Muslim law, both Sunni and Shia, a daughter is entitled to succeed to the property of the parents, yet there are customs and statutes, the operation of which excludes a daughter from inheritance. Such customs and statutes are treated as valid and daughters as non-existent at the time of opening of the succession.

Christian Law

According to Christian Law, a daughter inherits equally irrespective of the fact whether she has siblings or not. She also has the complete right to the personal property upon attaining majority.