Under Section 56(2) of the Income Tax Act, the recipient is liable to pay gift tax, not the donor.
I received a gift of Rs 75,000/- in cash from my father, mother and my father’s brother. Who is liable to pay tax on this transaction?
Since the Gift Tax Act has been repealed, the donor is not subject to any gift tax. So your parents and uncle are not liable to pay any tax on gifts made by them. However, with the introduction of a recipient-based tax on gifts under Section 56(2) of the Income Tax Act, the recipient of a gift is liable to pay tax on such receipt as these are treated as income if the aggregate sum of all the gifts received exceeds Rs 50,000 in a financial year. Please note that gifts received from certain specified relatives are exempt without any limit. Parents and uncles are included in the definition of specified relatives, so these gifts are not taxable in your hands, and you are also not liable to pay any tax on such gifts. However, the income from this money invested will be taxable to you.
I purchased a house jointly with my mother with a joint home loan. My mother is a government employee. All the EMIs are paid from my mother’s savings account. Can I take tax benefits for this home loan?
To claim the tax benefits for a joint home loan, you not only need to be a joint owner and co-borrower but also actually serve the home loan. Since your mother pays all the EMIs, you cannot claim the tax benefit for the home loan despite being a joint owner and co-borrower. Please note that no tax benefits are available under the new tax regime for home loan benefits under Section 80C for repayment of home loan and under Section 24b for interest paid for self-occupied house property. In case the house property is let out under the new tax regime, you can claim a deduction for interest paid on the home loan to the extent of taxable rent and not beyond that. Under the old tax regime, loss under the house property head is allowed to be set off to the extent of two lakh rupees every year against other taxable income, and the unabsorbed loss has to be carried forward for set off against taxable income under the house property head for eight subsequent years.
I am of Indian origin and have a British passport. I work in the United Kingdom. I have non-residential External (NRE) accounts with savings of more than ₹50 lakhs, on which I get interest. Do I have to pay tax in the United Kingdom or India?
Non-resident Indians and persons of Indian Origin can hold NRE or Non-Resident External accounts in India. These accounts come with certain benefits. Interest earned from deposits held in these accounts is not taxable in India as per the Indian Income Tax Act.
Please note that the local laws of your country may require you to include such interest income in your tax return filed in the UK.
It is advisable that you obtain professional advice about the taxability of this income in the United Kingdom and whether you can claim any benefits available under the Double Tax Avoidance Agreement between the two countries.
The author is a tax and investment expert and can be reached on jainbalwant@gmail.com
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)