Stamp duty will have to be paid by parents , husband for gifting their share to DIL
2) no gift tax would be levisble on gift made by parents to daughter in law under section 56 of income tax act
Gifting portions of building among family members
Father, wife and son ( married six years ago) have a bldg. jointly in their three names. All three have put in money in the construction of the property. The three share the rent at 26%, 37% and 37% having executed a registered Family Partition Deed about four years ago. The bldg. is not ancestral. The value of the property is about 5 Cr. The three now wish to include the Daughter-in-law as the 4 th share holder WITHOUT DUE CONSIDERATION in the following manner:- 1. The father gifts 6% out of his share plus the mother gifts 4 % out of her share to their DAUGHTER IN LAW WITHOUT DUE CONSIDERATION by executing a new Family Partition including her name as the 4 th share holder with 10% of the share. 2. The mother gifts 13% out of her share to her married son WITHOUT DUE CONSIDERATION making his share 50%. from the present 37%. Thus their share would be 20%, 20%, 50% and 10% respectively to father, mother, son and daughter in law. Accordingly they wish to register the property in their 4 names by registering a NEW Family Partition Deed. The Stamp Duty for registering this Family Partition is Rs.1000 per head ie total Rs.4,000. Q. Would this arrangement be in order and without any income tax implication due to the gifting ? Will the father and the mother ( donors ) have to pay Gift Tax / Stamp Duty or will the rental income have to be clubbed with that of the donors etc? Kindly clarify
Asked 8 years ago in Property Law
Religion: Hindu
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8 Answers
1. There is absolutely no requirement for a new partition deed unless all four of you wish to make physical partition and demarcate your respective sahre.
2.Since respective shares has been done though registered deed of partition there is no ambiguity in the portions of your shares.
3.If in spite of this you wish to go ahead with the partition deed you can do but there is no significant income tax is involved in this.
There is income tax payable on such gift deeds which was made without receiving any consideration.
The arrangement would be in order, this may be called as a registered family arrangement deed.
Sorry, I am rather confused with different answers! Can I now make a new " Family Arrangement Deed '' ( iso Family Partition Deed ? . The Family Partition Deed registered about 4 yrs ago was not declared as such any where) by simply declaring the ratios as per the mutual agreement ? There was no mention as such of the Family' Partition' Deed in the ITRs. However the details of ratio/ name and PAN were shown while calculating the individual rental income. Therefore can I now go ahead register a new " Family Agreement Deed" with details of the revised ratios of sharing the rent without mentioning the word 'gift'. As suggested it will be a family agreement. The property is to be shared under undivided shares under Tenancy act. Pl advise. Note: The ratios of sharing rental and the ppty are not proportional to the amounts put in in the property by the individual parties. With warm regards. URGENT Capt Jayagopal
Asked 8 years ago
you have already entered into deed of partition
2) partition deed is duly stamped and registered
3) even if it is not mentioned in ITR it is a regsitered document
4) you can enter into fresh agreement with revised ratios with consent of the parties
If a family arrangement deed or a partition deed is drawn and registered then all other issues will be taken care as per their respective share in the property.
Income tax is not payable on gift or partition deed.
The replies received were conflicting and confusing and did not answer my question. Therefore the previous email does not constitute the allowable Free Follow up question. But to my dismay the red sentence above shows that I have no Free follow up question remaining. Nevertheless, I will pay the Rs.200 as was indicated. I am resending the same original question making it more clear and trust you will provide the answers: My family consists of Self 82, Wife 77, married son 48, Daughter in law 41 and a grand son 6 yrs old. 1. Presently the first 3 own a rented bldg. The ratio of sharing rent of the undivided shares of the property was 26%, 37% and 37% under Tenancy Act. A FAMILY PARTITION DEED was made and registered about 4 yrs ago showing the above ratio, details of ppty ie ID No, and some terms and conditions to abide by. This ratio had been reflected in the ITR for calculating the ratio of property tax and the PAN of the three of us for calculating Income from House Property. 2. In order to provide some corpus of her own to my DIL, myself and my wife wish to transfer ( without due consdn) 6% and 4% out of our respective shares to enable her to own and enjoy 10% share of the ppty and the rent. 3. In addition, my wife wishes to transfer 13%( without due consideration) out of her share to her son thereby increasing his share from 37% to 50%. Thus the new ratio would be 20%/ 20%, 50% and 10% . to myself, wife, son and DIL. 4. I and my wife are super / senior citizens (82 and 73 yrs ) and are not in good health. Perhaps this transfer of portion of our share may be considered as transfer in anticipation of death. This will exempt tax on the transfer. (?) Under the above circumstances : We 4, now wish to make a REGISTERED FAMILY AGREEMENT DEED showing the revised share as 20/20/50 and 10 and register it . The agreement would primarily consist of details of bldg., property municipality ID, the four names, the ratios as 20,20,50,10% a few terms and conditions to abide by. No mention of earlier Family Partition Deed will need to be made in the new deed nor of the word 'gift' nor the term ‘ without due consideration’. The regn chgs will be Rs.1000 x 4 = Rs.4,000/- for the four originals. Last time not ‘Stamp Duty’ on the Family Partition Deed was demanded by the Registrar. Q. Will the above be in order and can we proceed with the new Family Agreement Deed ( or will it be termed Family Partition Deed )? Q2. Will there be any income / gift tax / STAMP Duty implication? If so pl explain. Q3. Will the income have to be clubbed to the party transferring the portion of the shares? NOTE: Section 56 of the IT Act contains details regarding the above and I cannot really understand it. You may pl refer to it.
Asked 8 years ago
Gift is not taxable in the hands of DIL under the head “Income from other sources” under section 56(2)(Vii). The stamp duty value/ Fair market value of the property is in excess of Rs. 50,000/-. Hence whole stamp duty value/ Fair market value is no taxable in the hand of DIL
2) Sec-56(2)(Vii) does not apply to any sum of money or any property received-
I. From any relatives, or
II. On the occasion of the marriage of the individual, or
III. Under a will or by way of inheritance,
3) in the present case if your son gifts it to his wife or you gift your share to your son or DIL then no gift tax would be applicable
4) stamp duty would be payable on the family partition deed
when a gift is received from either - Spouse, Father-in-law or Mother-in-law; clubbing of income provisions apply. It means that any income that DIL derive from the gift received by her from above three persons will be clubbed in the income of the respective person for taxation.
If you want to transfer a certain portion of your share to a person of your choice, the legally valid measure to be taken in this regard is to execute a registered gift deed.
Once this transfer takes place there may not be a necessity for a family arrangement or partition