DISTRIBUTION WITH MINIMUM TAX LIABILITY

R_PVK (Querist) 22 July 2009 This query is : Resolved
dear sir
my mother is about to acquire a property woth of 95lakh thru sucession which she intents to distribute as a gift to 9 members of the HUF this includes two House plus certain shares,ornaments,bank balances & utensils pl suggest an easy way leading to proper distribution with minimum liable tax .The relation between donor and donees who she want to donate as a gift are five own childrens & two daughter of her brother
regards
R_PVK

Regards
R_PVK

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A V Vishal (Expert) 22 July 2009
PVK,

Your mother can make a simple gift deed to her 5 sons, however the daughters of your maternal uncle don't qualify as relative under the definition of relative under the Gift tax Act, which terms relative as:

i) Spouse of the individual;
ii) Brother or sister of the individual;
iii)Brother or sister of the spouse of the individual;
iv) Brother or sister of either of the parents of the individual;
v) Any lineal ascendant or descendant of the individual;
vi) Any lineal ascendant or descendant of the spouse of the individual; and
vii)Spouse of the person referred to in clauses (ii) to (vi).

Hence your cousin will have to bear with the tax on their share of the property.

Harinarayan R. Tripathi (Expert) 22 July 2009
Dear Mr. R_PVK

In reply of your query, I state that:-

The first point you have used “intents to distribute as a gift to 9 members of the HUF”, If I am not wrong then understood that the property belongs to HUF and she want to dissolve the HUF and distribute all the properties coming under the HUF Property. In such case you need to execute Partition Deed instead of Gift Deed to distribute the property.

The Other point you have used word “minimum liable tax” then, if it is denoting the Stamp Duty then, there is the only of the Partition Deed and such Deed shall be amenable with the stamp duty as applicable to the particular state, where the Deed shall be executed.

I hope this will meet with your requisitions.

R_PVK (Querist) 25 July 2009
thanks
regards
R_PVK

Manish Singh (Expert) 27 July 2009
the best way out shall be to make a will in favour of all the beneficiaries. in rhis case there sahll be no income r other taxes neither stamp duty is payable. but it shall become operational oly after the death of the testator.