Income tax rate applicable to me if I give up my rights as a beneficiary to a non-beneficiary

1. Pls mention the income tax rate which is applicable to me, if I give up my rights as a beneficiary to a non-beneficiary, in return for money. 

2. Pls mention the income tax rate if I give vacant possession of my late father's property to my sister in return for money.

Asked 2 years ago in Taxation

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5 Answers

if it is a transaction related to an immovable property and you are intending to relinquish your rights in the property in favor of the co-shareholder for a consideration amount in return, you are liable to pay the applicable capital gains tax as per section 2(47)(i) of the Income Tax Act, transfer in relation to a capital asset, includes, the sale, exchange or relinquishment of assets.

Only the portion of the property being given up is subject to stamp duty; the entire worth of the property is not. If the property is transferred by a relinquishment deed for a payment, the transferor will unavoidably incur capital gains under the IT Act, and no tax benefits would follow.

T Kalaiselvan

Advocate, Vellore

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Yes till you are earning income from that property the same will be applicable to you

Prashant Nayak

Advocate, Mumbai

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Dear client, It depend whether it is a land, building and how long you have withhold the property. However, if it's a long term capital gain then 20%

Anik Miu

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- As per the Income Tax Appellate Tribunal , the income from the relinquishment of right over a property cannot be treated as capital gain for the purpose of levying an income tax.

2. As per Section 2(47) of the Income Tax Act, even extinguishment of any rights in a property would also cover under the definition of transfer. Therefore, once extinguishment of any right in a property comes under definition of ‘transfer’, as defined u/s.2(47) of the Act, then consequential consideration received for transfer of property would come under the provisions of section 45 of the Income Tax Act, 1961.

- You should contact an Income tax practitioner for getting a fruitful suggestions.