Enen if you execute gift deed you will incur tax liability I'f the said property is yeilding income to you
Legal opinion for selling of property
Dear Sir I have to sell 2 properties one in Indirapuram, Ghaziabad and other in Noida. Both in Uttar Pradesh. My questions are as follows: A) Indirapuram Property: 1. Property is in Ahinsa Khand 2 so what is the current indexation of this property for taxation purpose? We bought it in 2006 @45 Lacs. So till what amount taxation would be Nil. 2. Property is in the name of my mother & my brother (No allocation shared in the deed so considering it 50%-50%). 3. My brother is NRI & don't want to get funds in his account. Broker is suggesting that Banks won't give 100% to my mother as RBI has made rules strict. Broker is suggesting to get Gift Deed Made by my brother to my mother & then mother can take full payment of 100%. My question is that what is the expenses for gift deed? Broker is saying 7%+1% for UP which will be quite expensive. Kindly advise. 4. Is there a way to save costs & sell property also as all matter is within the family (Blood Relation) & any kind of power of attorney/documentation can be easily done? A) Noida Property: 1. Property is in Sector 78, Noida. Property is in the name of my mother & my sister (No allocation shared in the deed so considering it 50%-50%). What is the indexation of this property now? 2. My Sister is NRI & don't want to get funds in her account. Broker is suggesting that Banks won't give 100% to my mother as RBI has made rules strict. Broker is suggesting to get Gift Deed Made by my sister to my mother & then mother can take full payment of 100%. (Sister is Married). My question is that what will be the expenses for gift deed? Broker is saying 7%+1% for UP which will be quite expensive. Kindly advise. 3. Is there a way to save costs & sell property also as all matter is within the family (Blood Relation) & any kind of power of attorney/documentation can be easily done?
Asked 1 year ago in Property Law
Religion: Hindu
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10 Answers
1) broker is correct
2) if brother does not want t funds in his account t he should execute gift deed in favour of mother and mother would then be absolute owner of property
3) gift deed in favour of family member attracts concessional stamp duty
4)
The Uttar Pradesh government has waived off the stamp duty levied on properties transferred to families members. Earlier the stamp duty levied on such properties was seven percent of the transaction value. However, post the waiver announced on June 16, 2022, only Rs 6,000 will charged. Of this Rs 5,000 will be the registration fee and Rs 1,000 will be the processing fee.
The transfers between family members considered for this scheme include property transfers to spouse, grandchildren, siblings, mother, father, children, daughter-in-law and sons-in-law.
A) Indirapuram Property:
1. To figure out how much tax you have to pay on the property, you need to find out the indexation rate. This rate depends on when you bought the property and the government's Consumer Price Index (CPI). You can look up the applicable laws and CPI to find the exact indexation rate for your property.
2. Your mother and brother both own the property equally, so both of them need to be involved in the sale.
3. The cost for the gift deed depends on the laws and fees in Uttar Pradesh. You should talk to a lawyer to find out how much it will cost.
4. You might be able to save money by using a power of attorney or other paperwork.
B) Noida Property:
1. To figure out how much tax you have to pay on the property, you need to find out the indexation rate. This rate depends on when you bought the property and the government's Consumer Price Index (CPI). You can look up the applicable laws and CPI to find the exact indexation rate for your property.
2. The cost for the gift deed depends on the laws and fees in Uttar Pradesh. You should talk to a local lawyer to find out how much it will cost.
3. You might be able to save money by using a power of attorney or other paperwork.
Your brother can transfer his share of property in favor of your mother by executing a registered gift deed.
For this he will not suffer any tax including long term capital gains tax too.
Under the new policy, if a property is transferred within the family, instead of a seven percent stamp duty on the property cost, only Rs 6,000 will be charged as a transfer fee, effective from June 16, 2022. Of this, Rs 5,000 will be the registration fee, while Rs 1,000 will be the processing fee.
The transfers between family members considered for this scheme include property transfers to spouse, grandchildren, siblings, mother, father, children, daughter-in-law and sons-in-law.
Your mother can follow the broker's advise to get the shares in their respective properties of your both the siblings transferred to her name by a registered gift deed after which she will become an absolute owner of the entire property.
immovable property received without consideration received from blood relatives are not charged to tax.
Thanks for your answers.. I have one follow-up question.. To execute Gift Deed in Noida & Ghaziabad (i.e. in Uttar Pradesh), is it necessary for my brother to be present in India? Or Can I execute the deed on his behalf if he gives Power of Attorney to me? Thanks for answering..
Asked 1 year ago
you can appoint POA on his behalf and do the deed in his absence
Brother can execute specific POA in your favour to execute gift deed for the 2 properties
POA should be attested before Indian consulate abroad
Your brother can execute a power of attorney deed duly attested by a notary public in the local of the country where he currently resides in favour of a close relative back in India who should be a resident Indian.
The power of attorney deed should be adjudicated before the registrar to enable the power agent to represent and complete the tasks on behalf of the principal.
For your indrapuram property you should take power of attorney from your brother either on your name or on your mother's name, specifying that you can receive the consideration on his behalf. Gift deed will cost you 8%. ( No benefit in UP even if gift in blood relation)
For purpose of power of attorney..you send the draft to your brother via email thereafter your brother will simply sign it and get it apostille from embassy and send you hard copy.
For Noida property you can do the same
You will need to pay Long-Term Capital Gain Tax on both the properties. It can be calculated by computing the Cost Inflation Index(CII) of 2006-2007 with CII of present year and with the value of the property in both the years. This taxation amount cannot be Nil, but you can save it by investing this amount into bonds or new property or other govt. schemes.
Instead of having a gift deed, you can prepare a Power of Attorney (PoA) with regards to both the properties giving either you or your mother the power to sell it further and add accordingly a clause relating to funds if you don't wish the funds to be transferred to your siblings. Since, your siblings are not residents of India, you can easily prepare these PoAs with the help of the embassy offices concerned.
Ans to follow-up question:
Once the Power of Attorney is registered with regards to sale/gifting of the property, the presence of your brother is not required. Yes, you can execute the deed on his behalf by presenting the original PoA to the Registrar.
To execute a gift deed in Uttar Pradesh, your brother can give you a power of attorney (POA) to act on his behalf. However, the POA must be executed as per the Indian law and must be attested by the Indian consulate in the country where your brother resides. Additionally, the POA must specify the powers that you have been granted and the duration of the POA. It is advisable to consult with a local lawyer in India to draft and execute the POA as per the applicable laws.
