You don’t have to pay tax for gift by relatives

If I receive a non-agricultural land from my aunt as a gift, do I have to pay tax? My aunt has no children and wants to gift the land either to me or my mother. The market value of this land is around `6 lakh. If I accept this gift, will its value be included in my income for this fiscal? Should I ask my mother to accept the land as gift because she has no taxable income?
Unmesh, Via Email

Section 56(2) (vii) provides that the value of the sum of money or immovable property or movable property received without consideration or for inadequate consideration is chargeable to income-tax in the assessment of the recipient under the head “income from oth-er sources”, in cases where an individual or a Hindu Undivided Family receives, in any previous year, from any person or persons, on or after January 1, 2009.

* Any sum of money, without consideration (i.e. gift), the aggregate value of which exceeds `50,000, the whole of the aggregate value of such sum will be income in the hands of the recipient (i.e.donee).

* Any immovable property being land or building or both, without consideration (i.e. gift), the stamp duty value of which exceeds `50,000, the stamp duty value of such property will be income in the hands of the recipient (i.e.donee).

* Any immovable property being land or building or both, for a consideration, which is less than the stamp duty value of the property, by more than `50,000 (inadequate consideration), the difference between the stamp duty value of such property and such consideration would be income in the hands of the recipient.

* Any property other than immovable property, without consideration (i.e. gift), the aggregate fair market value of which exceeds `50,000, the whole of the aggregate fair market value of such property will be income in the hands of the recipient (i.e.donee).

* Any property other than immovable property, for a consideration which is less than the fair market value of such property, by more than `50,000 (inadequate consideration), the difference between the fair market value of such property and such consideration will be the income of the recipient.

However, the above provisions will not apply to any sum of money or any property received:
* From any relative.
* During the marriage.
* Under a will or by inheritance.
* In contemplation of death of the payer.

Hence, there will not be any income-tax liability, if your aunt is covered under the definition of ‘relative’ mentioned above. It is pertinent to note that the gift of an immovable property will be complete only on registration of the property in the name of the donee.

I am residing in self-occupied own house. But for my son’s treatment, my wife and daughter are residing in another town by taking a rented house. Can I claim it for HRA?
Sanjeev Rao, Via E-mail

Since you are residing in a self-occupied house, you will not be eligible to claim exemption towards house rent allowance (HRA) on rented house in another town used by your family.

(Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabad-based accounting firm. Readers can mail their queries on income tax to kamalrathi.ca@gmail.com [1])