I am a senior citizen — retired from public sector bank, getting a pension, rental income from two flats and interest income from fixed deposits. Out of the two flats, one is in Visakhapatnam, bought on February 15, 2003, for ₹8 lakh and gifted to my daughter on December 19, 2024, through a registered gift deed (the value as per registrar office is ₹68 lakh). Kindly clarify whether this transaction is to be reported in ITR next year (while filing the return).
Till now, I have declared the rental income from this flat in my ITR. After the date of gift deed, the rent will be given to my daughter. I do not intend to add the rent received on this flat after the date of gift deedto my income. Is it correct?
If my daughter sells this flat in future, what are the tax implications to my daughter? She is a housewife and not an income tax assessee.
GSR Murthy
The transfer of house property to daughter (relative as per Income-Tax Act) is not a taxable transaction in your hands and your daughter. The same is not required to be required to disclosed in the ITR. Regarding the rental income, your understanding is correct. As you do not own the house property and neither in receipt of rent, the rent received by your daughter will not be taxable in your hands.
At the time of sale of property, your daughter will be subject to capital gain tax. The cost of purchase shall be the original cost at which the residential property was acquired by you. As this shall qualify as long-term capital asset, she can opt for indexation and remit tax at 20 per cent or opt out of indexation to remit tax at 12.5 per cent, whichever is beneficial. Exemptions under Section 54/ 54EC can be availed depending on the other properties she own or investment in prescribed bonds.
The writer is Partner, Deloitte India
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