A tax exemption is available if a property is received from a relative

With respect to the above transaction, it would be advisable to have documentation in place to substantiate the genuineness of the transaction and evaluate stamp duty implications


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I have two apartments of which I want to gift one to my daughter. What will be the tax treatment?

—Sudhir Chaurasia

Any immovable property received by an individual from any person during any financial year (FY) without consideration and if the stamp duty value of the said property exceeds Rs50,000, it is taxable under the head ‘income from other sources’ in the hands of the recipient.

An exemption is available if the property is received from a relative, who include, among others, the individual’s parents. Accordingly, there should not be any tax implications in your daughter’s hands. You shall also not be taxed on the above gift transaction.

With respect to the above transaction, it would be advisable to have documentation in place to substantiate the genuineness of the transaction and evaluate stamp duty implications. We have assumed that your daughter is major (i.e., above 18 years).

Accordingly, any subsequent income from the apartment shall be taxable in your daughter’s hands depending on the nature of income and other factors (for example, number of properties held by your daughter).

Please note that if your daughter is minor (i.e. below the age of 18 years), clubbing provisions will be applicable. Accordingly, the income, if any, shall be included in the income of the either of the parent, whose total income during the relevant FY is higher.

I pay for the healthcare cover premium for both me (71) and my wife (67). Will I get an additional tax benefit for this?

—Aniruddha Padhi

An individual can claim deduction from total income in respect of payment made towards health insurance premium (Section 80D of the income tax Act). The deduction towards health insurance premium is available on payment basis.

The deduction could be claimed for payment of health insurance premium for self, spouse, dependent children and parents subject to prescribed conditions. In case of senior citizens (resident individual of 60 years or more during the FY, the deduction is available up to Rs30,000, including Rs5,000 towards preventive health check-up) for the relevant FY.

Deduction towards health insurance premium is available only if the amount is paid by any mode other than cash.

Since you are paying towards health insurance premium for yourself and your spouse and both of you qualify as senior citizens during FY17, you can claim maximum deduction from total income up to Rs30,000 per FY in aggregate for the premium paid for both of you.

I gifted my friend some money (Rs2 lakh) 5 months ago. Do I need to show this when I file my tax return this year?

—Shaun D’Silva

Under section 56 of the Income-tax Act, 1961, any amount exceeding Rs50,000 received without consideration during the FY is taxable in the hands of recipient as ‘income from other sources’. However, an exemption is available if the money is received from a relative or for specified purposes (say, on occasion of marriage).

Accordingly, the amount received by your friend without consideration shall be taxable in his or her hands as ‘income from other sources’.

There shall be no tax implications in your hands. You would not be required to report this transaction in your personal income tax return. But it is advisable to have a gift deed to substantiate the genuineness of the transaction.

I am a salaried individual. Do I have to pay advance tax?

—Qasim Shah

Advance tax is payable by individuals (as applicable) if the total tax liability on the estimated income is likely to be Rs10,000 or more during the FY.

This tax liability is calculated after considering tax deducted at source (TDS).

Assuming you are not a senior citizen, if you do not have personal income (i.e., other than salary), and appropriate taxes have been deducted and paid by your employer on the salary, you will not be required to pay advance tax.

However, if you have personal income, then the applicable tax (net of TDS) would have to be calculated.

If the said liability is Rs10,000 or more for the FY, you will be required to pay advance tax.

I have recently renovated my house, which I completely own and live in with my family. I have not taken any kind of loan for the renovation process. What tax exemption or rebate can I get for the expenses incurred?

—Akhil Chopra

The expenses incurred on renovation of self-occupied house do not qualify for tax benefit or deduction.

For a let out or deemed to be let out property, irrespective of the actual renovation or repair expenses, only a flat standard deduction of 30% is allowed.

If renovation expenses incurred are capital in nature, the same could be considered as ‘cost of improvement’. Accordingly, if you sell the house, while computing capital gains, the above mentioned renovation expenses, which have been considered as cost of improvement along with cost of purchase of house, can be reduced from the sales proceeds to determine taxable capital gains.

Parizad Sirwalla is partner (tax), KPMG.

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