Gift

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Gift

 

Q. Are oral gifts of immovable property permitted?

 

Ans: No, the subject matter of the gift must be an existing property. The existing property may either be movable or immovable property.

 

Q: What is meant by the word Conditional Gift?

 

Ans: Whenever a transfer of property, done via Gift, is controlled by fulfilling a prior condition by donee, it is called a "Conditional Gift". It can be of any of the two types:

  1. Precedent Condition: When the condition is to be fulfilled before the transfer of the gift.
  2. Subsequent Gift: When the condition is to be fulfilled after the transfer of gift.

 

Q. Which are the acts that can impair the act of gift?

 

Ans: A Gift of property stands void under the following conditions:

 

  1. If a gift has been obtained by:
  1. Force
  2. False Representation
  3. Fraud

 

  1. By imposing conditions detrimental to the interests of the contracting parties.

 

Q: What is/are the requirements of a valid attestation?

 

Ans: Yes, Gifts by NRI are taxable if received on any of the following occasions:

  1. Birthdays
  2. Anniversaries
  3. Festivals

 

Q: Is it necessary that both witnesses be present at the same time or must attest the document in each other's presence?

 

Ans: No. It is completely lawful for an executant to sign in the presence of one witness and mark in presence of the other witness.

 

Q: Will the rights of the transferee be affected by the suspension or revocation of the gift?

 

Ans: No, provided he acquired the rights for a consideration and did not have notice of such suspension.

 

Q: How is a gift treated under Income Tax Act, 1961?

 

Ans: Where a donor transfers a house property to his/her spouse, other than in connection with an agreement to live apart, the donor would continue to be the deemed owner of the property for the purpose of the Income tax Act, 1961. This also applies when the donor transfers the property to a minor child, other than a married daughter. Any earnings out of the said property would be included in the income of the donor.

 

Q: Are gifts of immovable property subject to gift tax?

 

Ans: Gift tax in India has been abolished on gifts made after 1 October, 1998. However wealth tax applies to the gift, considered as wealth for the assessment year when the gift is received. The donee is liable for wealth tax.

 

Q: Is there a tax on property received as gift through a Will?

 

Ans:No. There is no liability to gift tax, as it can be effectively received only after the death of the person making the Will.

 

Q: What all persons do FEMA (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 regulations apply to?

 

Ans: FEMA deals with the acquisition and transfer of an immovable property by way of a gift involving NRIs, PIOs and foreign Nationals, whether resident or non-resident in India.

 

Q: Is a NRI/ PIO permitted to transfer by way of gift all kinds of immovable property, whether agricultural/plantation/farmhouse property, residential or commercial property?

 

Ans: Yes. However, as per Regulation 4 (e), FEM (Acquisition and Transfer of Immovable Property in India) Regulations, 2000, the donee of any agricultural/plantation/farmhouse property transferred by a PIO donor can only be an Indian citizen and also a person resident in India.

 

Q: Who all are permitted to acquire as donee, any other property other than agricultural/plantation/farmhouse property from a PIO donor?

 

Ans: The following persons are permitted to be donee:

  1. All citizens of India, irrespective of their residence
  2. Foreign nationals who are persons resident in India (Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan, can acquire only after prior permission from the RBI.)
  3. PIOs, who are not residents of India.

 

Q: If a gift is made to two or more persons of whom one or more of them does not/do not accept the same, what is the impact of such non-acceptance on the interest of the donee/s accepting the same?

 

Ans: Under Indian Law, the presumption is that the transfer by gift to two or more persons is as the tenants-in-common i.e. each donee getting a distinct share in the property gifted. The relevant provision is contained in Section 125 of the Transfer of Property Act. Therefore, while the gift will be void only to the extent of the share of such donee who does not accept it, if the gift is made to two persons jointly and one of them does not accept it, the another one cannot take the whole.

 

Q: What is “acceptance” of gift and why is it one of the essential ingredients of gift? When should the acceptance be done?

 

Ans: Donee is not bound to accept the gift although an express acceptance by the donee is not necessary to complete the gift. It has long been settled that the acceptance of the gift by the donee is to be presumed until his dissent is signified. The use of the words "accepted by or on behalf of the donee" shows that the donee might be a person unable to express acceptance when the gift is to a minor and it may be accepted by the natural guardian on his behalf. However, it is essential that the gift is accepted during the life time of the donor and while he is still capable of giving; and, also it is essential that acceptance must be made during the lifetime of the donee, for if the donee dies before acceptance, the gift is void

 

Q: What is meant by “settlement”? How does it differ from “gift”?

 

Ans: Settlement is specie of or a type of gift only in certain circumstances. Transfer of Property Act does not define what is "settlement". However, the law pertaining to the stamp duty defines it albeit with the object of levy of the stamp duty. For example, Section 2 (t) of the State Stamp Act defines "settlement", under which the "settlement" means any non-testamentary (testament means a will) disposition of moveable or immoveable property made:

  1. In consideration of marriage;
  2. For the purpose of distributing property of the settler among his family or those for whom he desires to provide or for the purpose of providing for some person dependent on him;
  3. For any religious or charitable purpose

 

Q: Can the gift be made of the property not in existence, i.e. of the future property?

 

Ans: No. The subject matter of gift must be certainly existing moveable or immoveable property. It could be anything such as, goods, any right, title or interest in any immovable property which exists or even an actionable claim. It must be transferable within the meaning of Sec.6 of the Transfer of Property Act. A gift of the right to management is valid. But a gift of the future revenue of the village is invalid. Release of a debt is not a gift; because it does not involve any transfer of property but merely a renunciation of a right of action.

 

Q: Can foreign citizens of Indian origin acquire or dispose of residential property by way of gift?

 

Ans: Reserve Bank has granted general permission to foreign citizens of Indian origin to acquire or dispose of properties up to two houses by way of gift from or to a relative who may be an Indian citizen or a person of Indian origin whether resident in India or not, subject to compliance with applicable tax laws.

 

Q: Can immovable property held in India, be transferred by way of gift to relatives/registered charitable trusts/organizations in India?

 

Ans: General permission has been granted by Reserve Bank to non-resident persons (foreign citizens) of Indian origin to transfer by way of gift immovable property held by them in India to relatives and charitable trusts/organizations subject to the condition that the provisions of any other law, including Foreign Contribution (Regulation) Act, 1976, as applicable, are duly complied with.