You have a property worth Rs 1 crore. But you run into rough weather and desperately need money for a business venture. You find someone
who’s willing to give you cash to tide over the bad times. Even if the money is less than the circle rates fixed for that property, you are willing to ‘gift’ it to your saviour through a gift deed, with the stamp duty paid on circle rates.
Well, not anymore. The change in gift tax norms (Section 56) now mandates that property gifted to non-family members is subject to taxation and the value of the property computed at fixed circle rates becomes income for the year, on which income tax has to be paid. It stipulates that any money received in the form of immovable property as land or building shall be treated as income. Earlier, any money received from a non-relative, above Rs 50,000, was subject to gift tax. However, property was excluded from this purview.
Ajit Krishnan, partner, tax and real estate practice, Ernst & Young, says that consequent to the amendment, the income-tax law shall come as a double-edged sword attacking the donor as well as donee of the immovable property.
More : economictimes.indiatimes.com
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