What are the tax implications on presents?


I’m a Hindu male and private a 3BHK joint property with my father the place he stays. My father owns one different 1BHK property in his title the place I hold. We want to promote the 1BHK property to non-public a a lot greater dwelling. In the long term, my father and I need to private separate properties specifically particular person names.What are the tax implications if I get a gift of 100% stake inside the 1BHK dwelling from my father and offers him in return a gift of my joint 50% stake inside the 3BHK dwelling? What are the capital options implications if after turning into 100% proprietor of the 1BHK dwelling, I promote the property to enhance to a a lot greater flat? All properties are in Mumbai.

—Title withheld on request


We have got assumed that the 1BHK property owned by your father is a residential dwelling property, and the similar was acquired after 1 April 2001 and it has been held by him for larger than 24 months.

As a result of the current may be given by a specified relative, the transaction of current itself will not give rise to any tax implications in each your or your father’s palms. Accordingly, when the 100% stake inside the 1BHK property is introduced by your father to you and when 50% stake inside the 3BHK property is introduced by you to your father, there shall not be any tax implications in your or your father’s palms. Please phrase that the onus of proving that the said transactions are neutral and inside the nature of current rests with the taxpayer.

Often, current of an immovable property may very well be effected by a registered current deed along with price of related stamp obligation.

Subsequently, when you promote the 1BHK property, as it will be held for larger than 24 months earlier to such sale, the said property will qualify as a long-term capital asset. The resultant purchase/loss arising out of sale of said property may be taxable as long-term capital options/ loss (LTCG/L) in your palms. LTCG/L is calculated as a result of the excellence between web sale consideration and the listed worth of acquisition (ICOA) and enchancment.

As a result of the house property has been transferred by current, the value of acquisition for you may be the value to the distinctive proprietor. The listed worth of acquisition of the asset in your case may be calculated as worth of acquisition/worth inflation index (CII) of 12 months of acquisition * CII of 12 months of sale. (CII prescribed for FY 2021-22 is 317). Further, if the exact sale consideration is lower than the stamp obligation value by larger than 10%, the stamp obligation value may be thought-about the deemed sale consideration, for the goal of calculating such LTCG/L. The tax is payable by you at 20% on the following LTCG. A rollover exemption on the following LTCG is obtainable within the path of the following investments, matter to the prescribed conditions and timelines:

• Beneath Half 54 of the Act, by investing the LTCG in a model new residential dwelling;

• Beneath Half 54EC of the Act, by investing the LTCG in specified notified bonds; and

• Beneath Half 54GB of the Act, by investing web consideration in equity shares of an eligible startup.

Parizad Sirwalla is companion and head, world mobility suppliers, tax, KPMG in India.

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