Property gifted to relatives in India is not taxed

Under the income tax laws, the term relative includes spouse, siblings, spouse of siblings, brothers or sisters of either of the parents

I work in a bank in Kuwait and have a rupee fixed deposit in India. The interest is credited to my savings account and tax is deducted at source (TDS). Do I need to file a tax return?

—Kamal R.

It is mandatory for an individual to file her income tax return if total income before claiming tax deductions under sections 80C to 80U of the Income-tax Act, 1961, exceed Rs.2.5 lakh in a given financial year. This can include investments made in Public Provident Fund (PPF), life insurance contributions, interest on education loan, and donations made to specified charitable institutions. The limit is Rs.3 lakh for senior citizens (60-80 years) and Rs.5 lakh for super senior citizens (above 80 years). If the total income (before claiming deductions) in India does not exceed the limits specified above, the individual is not required to file a tax return in India. If TDS is more than the actual tax liability, a tax return may be filed to claim tax refund.

What are the TDS linked regulatory requirements with respect to purchase of immovable property costing more than Rs.1 crore when the buyer is a non-resident Indian (NRI)?

—Jayesh Pradhan

On purchase of immovable property (other than agricultural land) worth Rs.50 lakh or more, the buyer is required to deduct (and deposit) withholding tax at the rate of 1% from the consideration payable to the resident seller. Withholding tax deducted by the buyer needs to be paid to the credit of the central government within seven days from the end of the month in which the tax deduction is made. Tax can be paid online or offline along with Form 26QB. The seller of the property must furnish her permanent account number to the buyer.

I want to buy an office space for my sister in India, and I’m an NRI. Will either of us be taxed for this?

—Kanv Khatri

There is no gift tax in India. Accordingly, there will be no tax liability for you. However, income tax is payable by the recipient of the gift on any sum of money, movable property or immovable property received without consideration (i.e., without a quid pro quo), except if gift is received from a relative.

Under the income tax laws, the term relative includes spouse, siblings, spouse of siblings, brothers or sisters of either of the parents, and so on.

Therefore, a gift of office space that is located in India to your sister will not be subject to tax in India.

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