In most cases, land transfers attract stamp duty
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Please let me know whether there is any tax or stamp duty that has to be paid when a plat of land is transferred from an aunt to her nephew. Or, is such a transfer exempt from tax? Will they be considered as blood relatives in reference to the land transfer?
Usually, transfer of land—whether in the form of sale, gift or release—would always attract stamp duty. The stamp duty is calculated on the true market value of the land or the money consideration for which the land is being sold or transferred (depending upon the laws of the state where the land is located).
However, if the transfer does not involve monetary consideration and is being transferred solely out of love and affection as in the case of a gift to a close family member, say, to a husband, wife, brother or sister of the donor, or any lineal ascendant or descendant of the donor, then, in some states, stamp duty for such transfers is lower or negligible.
The rate of stamp duty payable on the conveyance or transfer of land would depend on the state in which the land is situated.
A transfer from an aunt to a nephew in most states does not attract a lower rate of stamp duty, and the transfer may be treated as a conveyance (even though the land may not be transferred for monetary consideration and solely out of love and affection) and stamp duty would nevertheless be calculated at the true market value of the plot (this value will be determined by the ready reckoner).
In addition to paying the stamp duty, the transfer deed will have to be registered as per the provisions of the Registration Act, 1908, with the applicable sub-registrar of assurances. Registration charges have to be paid at the time of registering the transfer or gift deed.
In addition to the registration fee, which would depend upon the laws of the state in which the land is situated, other local authority taxes may be applicable on such a transfer. If an aunt transfers the land to her nephew during her lifetime (including by way of a gift), the transfer may also have income tax implications. For this aspect, I would recommend that you seek the advice of a tax consultant.
As an alternative, the land could also be transferred through a Will. Transmission of property (including land) through a Will does not attract stamp duty. But it also means that the transfer would not be effected during the aunt’s lifetime but would take effect pursuant to the Will, upon her death. Following the aunt’s passing, the Will may also require probate by a court having jurisdiction over the estate of the aunt (for the purpose of giving effect to the transmission of the land in favour of the nephew under the Will), depending upon the laws of succession that govern the donor.
Is it compulsory to appoint an executor for a Will?
While it would be advisable to appoint an executor under a Will, it is not compulsory under the Indian Succession Act, 1925, to appoint one.
Where the testator has not appointed an executor, an administrator, through the grant of letters of administration by a competent court, may be appointed to administer the estate. It is only upon obtaining the grant of letters of administration that an administrator can give a valid discharge.
However, except in cases which require a probate or letters of administration, or in cases where the legal rights of the legatees have been challenged, the legatees may themselves administer the estate of the testator (without an executor or administrator being specifically appointed).
Marylou Bilawala is partner, Wadia Ghandy & Co.
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