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THE MAGIC WAND OF INDEXATION!

Gujarat High Court holds capital gains on gifted or inherited assets also enjoy indexation from date of original holding! Section 49(1) of the Income-tax Act provides that where the capital asset has been acquired by the taxpayer in any of the modes such as on partition of a Hindu Undivided Family or under gift or Will or by succession or inheritance, etc., the cost to the previous owner shall be deemed to be cost...

GIFT OF BMW NOT TAXABLE?

With only nine gifts in kind covered in the specified list, you can still enjoy receiving many more tax-free gifts! Two interesting readers’ queries relating to taxability of gifts as income have been discussed in the write-up today. TAXABILITY OF GIFTS IN KIND Query:  I am expecting to receive a BMW car worth Rs.50 lakhs from a dear friend of mine. Would this attract any income-tax liability in my hands? Reply:...

RELIEVING PAIN ON CAPITAL GAIN!

Bombay & Delhi High Courts hold that taxpayers can enjoy indexation even on assets received via gift or inheritance     If your grandfather had acquired a plot of land for Rs.10,00,000 in late 1981, which you received by way of inheritance on his death in 2012 and you are planning to sell the same in early 2013 for a consideration of Rs.85,00,000, what would be the income-tax you would be required to pay on...

HUF GIFTS NOW FREE FROM TAX!

As per the 2012 amendment effective from 1st October, 2009 in case of an HUF, its member shall be treated as a relative!                  The scope of definition of ‘income’ u/s. 2(24) was widened by the Finance Act, 2004 by providing that ‘income’ would now include any sum referred to in Section 56(2)(v). Section 56(2)(v) was introduced to provide that, “where any sum of money exceeding Rs.25,000 is received...

Three More Days Before Your Gifts Get Taxed As Income!

Purchases Below Fair Market Value Also Trapped In Tax Net From 1st October’09 If your friend had promised you to gift a diamond studded gold watch worth Rs.3 lakhs, encash that promise in three days. Delay may cost you dear, since the receipt of this gift after 30th September, 2009 will be treated as your taxable income, attracting a straight income-tax of Rs.92,700, if you fall in the top tax-bracket of 30.9%....

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