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Gift of capital asset to spouse is not chargeable to tax
November, 02nd 2018

I and my wife jointly own a flat in Mumbai. The EMI is paid by me. My wife has received some proceeds from selling a flat which was purchased by her. I want to sell the Mumbai flat to her at market price by paying due registration and stamp duty charges. Can I sell a flat to wife who is also joint owner of the property?

– Alok Sheopurkar

Your wife is a 50:50 owner in the flat, but she did not pay any money for its purchase. Now you want to sell your share in the flat to your wife at market price. Any transfer of capital asset entails capital gain chargeable to tax. However, gift of capital asset to spouse is not chargeable to tax. Accordingly, if the purpose is to transfer the ownership of the flat to your wife such that she becomes the 100% owner of the said flat, you can consider gifting her your share without any consideration. The taxability of the gift shall remain tax-free, irrespective of the fact whether she has funded the purchase of the flat or not.

– If a person starts a business of real estate with `5-10 lakh capital and has no other income source, will it be considered business income and charged under Profits and Gains from Business and Profession (PGBP) or charged under capital gain? Also, will that be covered under Micro, Small and Medium Enterprises (MSME)?
—Ajaz Khan

The individual is starting a business as a proprietor, without forming any legal entity, viz., company or LLP. Further, the real estate purchased is done with the sole purpose of resale. Thus, it is evident that the individual shall be engaged in the business of real estate trade. Hence the provisions of PGBP shall be applicable. Benefits of MSME can be claimed by proprietors but only if the business is registered as an MSME.

– My brother works with a shipping company in Singapore. He stays in India for about 100 days. Will he be exempted for paying tax in India?
—Dolly Moga

If he is an Indian citizen working abroad or a member of a crew on an Indian ship, then he is considered as an Indian resident if he stays in India for more than 182 days during that financial year. Non-resident Indians are subject to tax in India only in respect of India sourced income (that is, income received, accruing or arising in India or deemed to be received, accrued or arisen in India). However, income which is received and earned outside India is not taxable in India

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