Can my father gift his existing business to my Hindu Undivided Family (HUF)? If so, what is the procedure that needs to be followed? Also, will it create any tax liability for the HUF or any one of us individually?
Yes, your father can make a gift to the HUF, including his existing business. He will need to prepare a gift deed with associated stamp duty to effect a transfer. The market value of the business with all its assets, net of liability will be treated as the value of the gift.
In accordance with the definition of specified relatives under the income tax laws, only the members of the HUF are treated as relatives. Since your father is not a member of your HUF, the gift made by him will be fully taxable in the hands of your HUF. However, if he bequeaths the same to your HUF under a Will, it will not entail any tax liability for your HUF as anything received under a Will or as inheritance is not to be treated as income even if the recipient is a non-relative.
I am selling my small flat and investing the sale proceeds for buying a bigger flat from a non-resident Indian (NRI). What is the tax procedure for capital gain and deduction of tax at source (TDS)?
Under Section 54 of the Income-tax Act, 1961, a person can claim exemption from long-term capital gains (LTCG) arising from sale of a residential house by investing the capital gains in another residential house property.
Since you are investing the entire sale proceeds in new residential flat, you can claim exemption under Section 54 for full LTCG. The exemption can be claimed while filing your income tax return (ITR). Since you are buying the flat from an NRI, you will have to obtain a tax deduction account number and deduct tax at source (TDS) on payment to be made to the NRI. If the flat was held by the non-resident for more than two year, the rate of tax will be 12.50 per cent of the sale value. If the seller furnished the documentary evidence of his purchase cost, you can deduct the tax on the capital gains at 12.50 per cent.
I would advise you to take help from a practicing chartered accountant to avoid committing any mistake in tax deduction.
My father is 88 years and my mother is 83 years old. My father draws pension. Previously, he was regularly filing his ITRs, but since the last 8-9 years when he started keeping not so well, he had stopped filing the returns. Banks are deducting TDS from his pension and TDS on interest on fixed deposits. Apart from the above two sources, he has no income. In this scenario, is he required to file an ITR? If yes, then what about the years for which he has not filed his returns?
They have to file ITR if their income from both sources exceeds Rs 5 lakh which is the exemption limit for those above 80 years of age under the old tax regime. If they wish to opt for new tax regime, they have to file their ITR if their income from both the sources exceeds Rs 3 lakh for the current financial year.
Even if it does not exceed this limit, they have to file ITR to claim the refund of TDS. At any given point of time you can file ITR for one year only. As such, you cannot file old returns unless you want to claim refund. If you want to claim refund for old years, you will have to file an application for condonation of delay and then after the delay is condoned, you will be able to file ITR for maximum six years.
The author is a tax and investment expert and can be reached on jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
