Tax matters: Not liable to capital gains tax on property gifted by relative
Q I intend to gift some shares purchased more than 3 years ago, to my sister by way of Off Market Transfer from my demat account to her demat account. These transfers do not attract any liability of Security Transaction Tax. I want to know whether these transfers will attract Capital Gains Tax and/or Gift tax either in my hands or my sister. — Ram Mohan
After the amendments in Section 56, with effect from October 1, 2009, transfer of any property (which includes shares and securities) without adequate consideration shall attract tax liability in the hands of donee (receiver). This provision is however not applicable where the property is received from any “relative”. Brother-Sister relationship is included in the term relative and therefore the gifted shares will not attract any liability to capital gains tax.
Q After 15 years in the UK, I returned to India in 2008. From June 2018, I have been receiving the UK Government pension. As pert the India—UK Double Taxation Agreement of 1994, I don’t have to pay tax in India. Accordingly, the UK pension department is sending the whole amount directly to my account which I maintain in India. I shall be earning Rs 8.04 lakh (approx) in FY19. Will I have to pay the same tax rates as a normal Indian citizen who has always been resident? How much will be the quantum of tax for FY19? Can I claim any deductions? — Radheshyam
As per the provisions of Indian tax laws your residential status is that of a “resident”, hence, your entire global income shall be taxed in India and the normal rates of tax applicable to an individual assessee shall also be applicable to you. You can of course claim deduction upto Rs 1.5 lakh under Section 80C by investing in the various specified instruments like LIC, NSC, PPF, etc. For determining the quantum of tax liability you n eed to compute your total income i.e. your pension and other income, if any and claim various deductions provided under the I-T law.
Assuming you have utilised full amount of Rs 1.5 lakh as deduction under 80C, your tax liability on your total income of Rs 6.54 lakh for FY19 works out to Rs 45,032 (including health and education cess at 4 per cent) or in case you happen to be a senior citizen your tax liability shall be Rs 42,432.
Q In the FY19, so far I got the short term capital gain of Rs 95,000 from the sale of shares and securities and net taxable salary will be Rs 1.5 lakh. I do not have PAN. Also how much will be tax payable on total income of Rs 2.45 lakh?
— Suresh
You are advised to apply for PAN immediately. For FY19 your tax liability shall be “nil” since your taxable income is less than Rs 2.5 lakh.
