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What are the tax implications on a gift deed?
April, 06th 2017

Dilip Lakhani, Senior Chartered Accountant, answers the tax related queries from our readers.

My son who is in government service is planning to buy a plot of land to build a house. I want to help him by giving Rs 5-10 lakh. Kindly let me know if such transaction requires any documentation under the law. If so, what formalities and documents are to be completed? Is there any tax implication for the receiver?

If you give any sum of money to your son by way of gift, neither you nor your son will have to pay any tax on the money gifted. Your son may then utilise these funds for buying a plot of land.

It is advisable to prepare a Gift Deed to prove the genuineness of the gift by identifying the donor, the donee and also the amount gifted. The gift deed will contain the complete details about the gift and will also protect your son from a claim by any person over the said amount gifted.

Please clarify the amendment regarding loss from house property.The amendment was supposed to bring parity between self-occupied and let out properties. However, the amendment seems to indicate the loss under the head `loss from house property' be restricted to Rs 2 lakh a year. Hence, in the case of multiple properties, what is the maximum loss from house property that can be set off against income? Is it Rs 2 lakh per property or is it Rs 2 lakh overall?

As per the new sub-section 3A inserted in Section 71 of the Income Tax Act, 1961, set-off of loss under the head `income from house property' against any other head of income shall be restricted to Rs 2 lakh for any assessment year. Thus the loss under the head `income from house property' in respect of all properties put together will be restricted to Rs 2 lakh.

The unabsorbed loss under this head shall be allowed to be carried forward for 8 years immediately succeeding the assessment year for which the loss is computed and set off against the income under the head income from house property.

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