• Can father give money to buy flat for married daughter?

Hello,
We (me and my wife) are outside India and will be travelling to India for buying a apartment. We are looking apartment in range of 80 Lac.
Over period of last 3 years, I have transferred around 10 Lac to my father in law. I gave more money to him on various occasions, but that was in cash, so it will not be countable.
Now, he will be giving 60 Lac (DD in favor of builder) from his bank account. Rest 20 lac will be taken from my wife's account (DD in favor of builder). This flat will be registered in name of my wife.
Do we see any tax/justification/complication, when father is paying for flat for daughter from his bank (either our side or FIL side) ?
He is retired government employee. 
Thanks
Asked 7 years ago in Taxation

4 answers received in 2 hours.

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10 Answers

1. father can pay substantial amount in purchase of flat.

2.father should have enough resources to pay that substantial amount otherwise it shall be deemed as benami property.

3. according to new benami property act, a person can pay or purchase a immovable property in name of his son or daughter (whether married or unmarried) and it does not come under banami property.

Shivendra Pratap Singh
Advocate, Lucknow
5127 Answers
78 Consultations

1. according to section 60 and 64 of the income tax act, you have to mention that property in ITR because it is registered in your name. this property will be clubbed with your income but you have to pay gift tax when whole consideration is paid by your father.

Shivendra Pratap Singh
Advocate, Lucknow
5127 Answers
78 Consultations

1) father is free to transfer funds in his daughter account for purchase of flat

2) however transaction should be duly reflected in his income tax returns

3) also daughter should in her Income tax returns mention receipt of RS 60 lakhs from father

4) it is advisable to purchase flat in joint names of father and daughter

5) later father can execute gift deed of his share in flat in favour of his daughter .

Ajay Sethi
Advocate, Mumbai
97681 Answers
7906 Consultations

1) you dont have to pay any tax on apartment which is in your wife name

2) gift by father in favour of daughter would be exempt from gift tax

3) As per the Income Tax Act, 1961 if the value of gifts received is more than Rs. 50,000 a year, then such amount is taxed as income in the hands of the receiver. These gifts may be in any form – cash, jewellery, movable and immovable property, shares etc.

However, this rule is not applicable if your relatives present the gifts. , the income tax rules specify relatives from whom tax free gifts can be received. These are:

Parents

Spouse

Your and your spouse’s brothers and sisters

Brothers and sisters of your parents

Your lineal descendants (including spouses)

Lineal descendants (including spouses) of your spouse

4)you can purchase flat in joint names . later father can gift his share in flat to daughter . stamp duty on gift from father to daughter attracts nominal stamp duty of Rs 200 in Maharashtra . registration charges are also nominal Rs 200

Ajay Sethi
Advocate, Mumbai
97681 Answers
7906 Consultations

since your father in law is contributing Rs 60 lakhs for purchase of flat in daughter name it is advisable that flat be purchased in joint names to protect father in law interest

2) he can later execute gift deed in favour of his daughter during his lifetime if he so desires

3) in the alternative he can bequeath his share in flat to daughter by will

4) ultimately it is father in law call whether he wants to just give DD in favour of his daughter of Rs 60 lakhs or wants share in flat

Ajay Sethi
Advocate, Mumbai
97681 Answers
7906 Consultations

Hi,

Let me clarify a few things here. The amounts given by you to your father-in-law will be exempt in your father-in-law's hands, as it is gift from a relative. Similarly, the amounts gifted by your father-in-law to your wife (i.e. his daughter) is also exempt in your wife's hands, as it is a gift from a relative. There is no gift tax anymore.

Considering the options stated by you above, the option where your father-in-law gives a DD to the builder and the flat is registered in your wife's name is better option. There is much hassle in paying registration fee and stamp duty in case you want to transfer the property from your father-in-law's name to your wife's name, in case you choose the second option.

In case you buy the property in your wife's name, you will have to pay property taxes annually to the municipal authorities. For the purpose of income-tax return, if this property is the only property your wife owns in India, then you can claim that it is self-occupied and pay no tax on it. If you rent out the property, then the rental income, has to be offered for tax.

Trust this clarifies.

Regards,

Keerthiga Sharma

M.Com., CA, LL.B

Keerthiga Sharma
Advocate, Greater Mumbai
44 Answers
2 Consultations

Your father in law is jointly funding for the purpose of buying a property by his daughter.

This can be treated as gift by father to his daughter.

The donee may pay the applicable gift tax.

T Kalaiselvan
Advocate, Vellore
87882 Answers
2366 Consultations

Hello,

Apologies for joining in late, in my opinion (b) option is better option for you.

Regards

Anilesh Tewari
Advocate, New Delhi
18091 Answers
377 Consultations

1. Even if she is not an addressee, she can accept this gift from her father. Her father will identify the source of income.

3. Alternately the property can be purchased in the joint names and he can execute a registered gift deed of his share to her which may not attract gift tax since no consideration passed.

4. She may consult an auditor who will let you know that.

T Kalaiselvan
Advocate, Vellore
87882 Answers
2366 Consultations

You should understand the difference between gift tax and stamp duty.

The gift tax is payable for the gift received whereas the registered gift deed will attract necessary Stamp duty.

You can choose which ever option is suitable to your situation.

T Kalaiselvan
Advocate, Vellore
87882 Answers
2366 Consultations

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