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I am a regular reader of BusinessLine . I would like to know: I) If a son-in-law gives a two-bedroom flat to his mother-in-law as gift, is there any tax liability on the part of the recipient; if so, how much? II) Can the gift be given to a brother-in-law, if he is an Indian with a US citizenship?
Raja
As per the provisions of Section 56 of the Income Tax Act, if any person receives any immovable property without consideration (having stamp duty value of more than ₹50,000), the stamp duty value of such property is taxable in the hands of recipient. However, if such property is received from a relative (as defined under Section 56 of the I-T Act), the same shall not be taxable in the hands of the recipient.
Mother-in-law qualifies to be ‘relative’, as defined under Section 56. Accordingly, a gift to the mother-in-law will not be taxable in her hands.
Further, as per the provisions of the Foreign Exchange Management Act, 1999 (FEMA), a Person of Indian Origin (PIO) may acquire any immovable property (other than agricultural land/plantation property/farm house) in India by way of gift from a person resident in India or a NRI or a PIO (as defined under FEMA). Brother-in-law also falls under definition of relative under the I-T Act and such receipt of immovable property shall not be taxable in his hands.
The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in
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