My brother and I collectively bought a property 10 years in the past. My brother contributed 30% of the worth whereas I contributed the remaining. This may be evidenced solely from the Cash Receipt connected to the Registered Sale Deed however not talked about explicitly within the Deed. Now my brother desires to Present his share of the property to me (out of affection and affection). We need to confirm the Stamp Responsibility payable on the Present Deed. If the present market valuation of the property is ₹100 (for instance), will the Stamp Responsibility be levied on ₹50 (equal share) or on ₹30 (share contributed by him on the time of buy)?
—Identify withheld on request
As per Indian Stamp Act, 1899 learn with state-specific legal guidelines, most states prescribe stamp obligation on a present deed as calculated based mostly on the share being transferred as per the present market worth, not the unique contribution ratio — until the shareholding is clearly recorded within the registered sale deed.
In your case, though your brother contributed 30% of the acquisition worth, the registered deed considers each of you as 50:50 co-owners, since there is not any specific point out of contribution ratios. A cash receipt, whereas useful, just isn’t conclusive proof of possession proportion in property regulation until acknowledged within the title doc itself.
So, if the present market worth of the property is ₹100 and your brother is gifting “his share,” the stamp obligation would usually be calculated on ₹50 (i.e. half the property’s present market worth), not ₹30.
That mentioned, stamp obligation charges and exemptions fluctuate by state. Some states supply concessional stamp obligation for presents between siblings or shut family, and the definition of “relative” for this goal may additionally differ. It’s advisable to seek the advice of the native Sub-Registrar and/ or a property lawyer to examine if sibling-to-sibling presents qualify for such concessions in your state.
For a person who’s within the larger tax bracket with little room for tax optimisation, wouldn’t it be higher to promote ESOPs by way of HUF the place he’s the karta or in particular person capability? One other associated query is, can ESOPs as soon as vested be transferred to an HUF?
—Identify withheld on request
Below regulation, Hindu Undivided Household (HUF) is handled as a separate entity, distinct from its members (together with Karta). The HUF has its personal PAN, financial institution accounts, demat accounts and information its personal tax returns.
ESOPs are granted to a person of their capability as an worker, and aren’t normally transferable to the HUF, even after vesting. Typically, the phrases of the ESOP plan are prone to prohibit any such switch. Even when technically permitted, shifting vested ESOPs to the HUF for tax planning might not work in substance.
In brief, ESOPs can’t be used for HUF-based tax planning. Routing such revenue via the HUF would probably be thought of tax avoidance, and the revenue should still be clubbed again to the unique holder below part 64(2) of the Revenue-tax Act, 1961.
CA Vijaykumar Puri, companion at VPRP & Co LLP, Chartered Accountants
