Upgrad LLM

tax liability if brothers relinquish respective share


Hello Sir,
Me and my brother co-own two flats. One in Delhi and the other one in pune. My brother wants me to settle in pune , hence I am relinquishing my share in Delhi flat and he is relinquishing his share in pune flat. Since I am moving to another city he is gifting me 50lacs as gift. Hope it would not attract any income tax on my end. We will sing a MoU and will mention above that he is gifting me 50 lacs and will get it registered by way of gift deed.

Regards, Tripathy.

 
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Scientist/Engineer

If you declare everything the way you have declared here in your tax returns, the taxman will suspect a nexus among the three transactions and compute your tax accordingly. If you do not declare them or only declare them partially in a manner to reduce or evade tax you can be prosecuted for evasion of tax. Your relinquishments will come under tax laws for exchange of property.  Taxman will see a nexus between the so called gift and the difference in price between the propeties relinquished/exchanged.

If you partially disclose in your returns you are taking a chance and a risk.

 
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Scientist/Engineer

The net effect if found out or suspected could be viewing the cash gift as a capital gain on relinquishment of the costier portion of the 2 flats.

 
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