Personal Finance

Your taxes

| Updated on January 02, 2021 Published on January 02, 2021

I purchased a flat on November 16, 2010 for ₹24.5 lakh and sold it on March 11, 2020 for ₹38 lakh and there is no long-term capital gains. Out of the ₹38 lakh, I have transferred ₹35.5 lakh to my wife’s account as a gift as I am having serious health issues (aged 65 years). Kindly let me know whether this transaction has to be shown in my I-T return for FY 2019-20 (AY 2020-21). I am a retired bank employee having pension income, interest on fixed deposits and rental income.

— GSR Murthy

The house property (flat) sold in FY 2019-20 qualifies to be a long-term capital asset. Accordingly, any profit / loss arising on such sale shall be required to be calculated as per provisions of section 48 of the I-T Act, and would be required to be reported in your tax return (Schedule CG) as long-term capital gains /loss (LTCG/L) while filing tax return for FY 2019-20.

In addition to the capital gains/loss, considering the nature of the other incomes that you have during FY 2019-20 i.e., pension, interest on fixed deposit and house property income), you would be required to file your tax return in Form ITR-2.

Regarding the gift made to spouse, please note that as per the provisions of section 56 of the I-T Act, if any person receives any sum of money without consideration (having aggregate value of more than ₹50,000), the whole of such sum is taxable in the hands of the recipient. However, if such money is received from a relative (as defined under section 56 of the I-T Act), the same shall not be taxable in hands of the recipient.

Spouse qualifies to be ‘relative’ under section 56 of the I-T Act. Accordingly, the gift to your wife shall not be taxable in her hands. Further, there is no requirement to report such gifts in the income-tax return form.

Separately, in case of any income (like interest etc.) generated from such gifted money shall be clubbed and taxed as your income. Any further generation of incomes from the initial incomes earned shall be considered to be your wife’s income and taxed in her hands.

I am a government employee and would like to know about the tax implications if I transfer some shares from my demat account to my daughter's demat account through off market. My daughter is a student.

— A Srinivasa Murthy

I presume that you wish to transfer certain listed shares held in your demat account to your daughter’s (who is a major) demat account.

As per provisions of Section 56 of the Income-tax Act, 1961 (‘Act’), if any person receives any property, other than immovable property, without consideration (having aggregate fair market value of more than ₹50,000), such aggregate fair market value of property is taxable in the hands of recipient. However, if such property is received from a relative (as defined under section 56 of the Act), the same shall not be taxable in hands of recipient.

As father of an individual qualifies to be ‘relative’, hence shares transferred by you to your daughter shall not be taxable in her hands, even if the market value of shares exceeds ₹ 50,000.

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Published on January 02, 2021
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