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Should the amount received from my mother as a gift, transferred through her bank (RTGS), be disclosed while filing my I-T return?
- Subhankar Gupta
As per the provisions of income tax law, any sum of money received from a relative as a gift is not chargeable to tax. There is no limit on the amount that can be given as a gift by them. The term relative has been defined in the income tax act and the same includes mother. Hence, the sum gifted to you by your mother is not chargeable to tax and hence does not need to be disclosed while filing your income tax return.
Please note that you may be asked by the taxman to explain the receipt of the gift, in which case you will have to provide complete details.
I sold a residential flat that I owned in the city in the second week of April 2014. With this amount, I booked two flats in the same city in the suburbs. Is capital gains tax payable as per the new amendment in Section 54 made in this Budget, or will the old provisions apply?
- S Venkataraman
According to the provisions of income tax law, a residential house is considered a long-term capital asset (LTCA) if it is held for more than 36 months. The long-term capital gain (LTCG) arising from the transfer of a LTCA, being a residential house, shall not be chargeable to tax where the assessee has purchased one residential house in India one year before or two years after the date on which the transfer took place, or has, within a period of three years after the transfer date, constructed a residential house in India. It is important to note that the amount of LTCG should be equal to or less than the cost of the new house, otherwise the exemption shall be reduced proportionately.
The memorandum to the Finance Bill (No. 2), 2014, explains that the benefit was intended for investment in one residential house within India. The judicial precedents in the past have also concluded that two units, if used as one residential house, are eligible for exemption. You may claim the exemption on both new flats if they are intended to be used as one residential house. However, litigation around this view cannot be ruled out.
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