Your Queries – Income Tax: Gifting moveable property to relatives does not trigger taxation

By Chirag Nangia

I intend to gift all my share holdings to my son who is unemployed and does not file any return. Advise the best way to transfer the holdings to enable him to do share trading. What shall be his tax liabilities?
—Rajinder Pal Singh
From an income tax perspective, gifting moveable property to relatives does not trigger taxation. Therefore, you may transfer shares to your son without attracting any tax liability in his hands. When he finally sells these shares received as gift, for computation of capital gains, he shall include in his period of holding, the period for which these were held by you. Also, the cost at which you bought the shares is treated as your son’s cost of acquisition.

I have two mutual fund folios, one in my name and the other in my wife’s name, each with joint holding. In my and wife’s Form 26AS, the reported amount under SFT-010 is much more than the purchases made by me and my wife. What should I do?
—P K Rakshit
As per income tax rules, a mutual fund house, for the determination of threshold of Rs 10 lakh, in a case where the account is maintained or transaction is recorded in the name of more than one person, shall attribute the entire value of transaction or the aggregated value of all the transactions to all the persons. So the entire transaction is shown as invest-ment in your Form 26AS. Query is raised by IT department only in case of mis-match. It is advisable you and your wife make correct disclosure of income from mutual funds in your respective ITRs and maintain proper documentation.

I started a new job from August 2020. During April-July, I was as a self-employed professional in the same city. To compute HRA exemption, do I include rent paid for the whole year or only for August 2020 – March 2021?
—Aditya
The least of the following is allowed as exemption in respect of HRA (i) an amount equal to 40% of salary (50%, if house is situated at Bombay, Calcutta, Delhi or Madras) (ii) HRA received by the employee in respect of the period during which rental accommodation is occupied by the employee during the previous year (iii) the excess of rent paid over 10% of salary. Calculate the amount of exempt HRA based on actual rent for the period during which the allowance is received.

The writer is director, Nangia Andersen India. Send your queries to [email protected]