Kothandaraman is a PIO (Person of Indian Origin) settled in the US from 2005. He wants to purchase a property in India and gift it to his daughter Supriya, who is a “Resident” in India. Kothandaraman wants to know the tax implications. He also wants to know if there are any restrictions for a PIO to purchase a property in India.
It is Diwali – the festival of lights ! Irrespective of cultural differences, festival time always brings people together. And one thing that brings joy in any festival is gifts! And it is good to know what is taxable and what is not.
As per sec 56 of the Income Tax Act, Gifts are taxable in the hands of the receiver if value of gifts are more than Rs. 50K
But gifts received on the occasion of marriage and gifts received (anytime) from a “relative” is not taxable.
Income Tax Act defines the word “relative” to include:
- Spouse of the individual
- Brother or sister of the individual
- Brother or sister of the spouse of the individual
- Brother or sister of either of the parents of the individual
- Any lineal ascendant or descendent of the individual
- Any lineal ascendant or descendent of the spouse of the individual
- Spouse of the persons referred to above
Since Kothandaraman intends to gift a property to his daughter Supriya, it will not be taxable in the hands of Supriya.
It is good practice to prepare a gift deed and get it registered (with related stamp duty)
Further to address Kothandaraman’s doubts on whether a PIO can purchase a property in India – There is no restriction for an NRI or a PIO to buy a property in India.
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Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.
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