Donation of capital property to a spouse is not taxable

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. The tax liability of the donation remains tax-free, whether or not it has financed the purchase of the apartment.

By Chirag Nangia

– My wife and I jointly own an apartment in Mumbai. IME is paid by me. My wife received part of the proceeds from the sale of an apartment that she bought. I want to sell him the Mumbai apartment at market price paying the registration and stamp fees due. Can I sell an apartment to a woman who is also a co-owner of the property?
– Alok Sheopurkar
Your wife is a 50/50 owner of the apartment, but she has not paid any money for her purchase. Now you want to sell your share of the apartment to your wife at market price. Any transfer of fixed assets results in a taxable capital gain. However, the gift of capital property to the spouse is not taxable. So, if the goal is to transfer the ownership of the apartment to your wife so that she becomes 100% owner of the apartment, you can consider donating to her from you without any consideration. The tax liability of the donation remains tax-free, whether or not it has financed the purchase of the apartment.

– If a person starts a real estate business with a capital of 5 to 10 lakh and has no other source of income, will it be considered as business income and charged against profits and gains from business and occupation (PGBP) or imputed for capital gain? Will this also be covered by micro, small and medium enterprises (MSMEs)?
—Ajaz Khan

The individual starts a business as an owner, without forming a legal entity, namely, a corporation or LLP. In addition, the real estate purchased is done for the sole purpose of reselling it. So, it is obvious that the individual must be engaged in the real estate business. Therefore, the provisions of the PGBP will apply. The benefits of MSMEs can be claimed by owners, but only if the business is registered as an MSME.

– My brother works with a shipping company in Singapore. He stays in India for about 100 days. Will it be tax exempt in India?
—Dolly Moga

If he is an Indian citizen working overseas or a crew member on an Indian ship, then he is considered an Indian resident if he stays in India for more than 182 days during this exercise. Non-Resident Indians are subject to tax in India only in respect of Indian source income (i.e. income received, accrued or generated in India or deemed to be received, accrued or generated in India ). However, income received and earned outside India is not taxable in India

The writer is Director, Nangia Advisors LLP. Send your questions to [email protected]

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