| Question And Answer | |
|---|---|
| Subject: | Is immovable property gifted to a relative through a trust taxable or not |
| Category: | Income-Tax |
| Querist: | Priti Sethi |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Gift, immovable property gifted to a relative through a trust, Private Trust |
| Date: | November 3, 2022 |
Is immovable property gifted to a relative through a trust taxable or not, and is it payble by the donor? What if the trust has created a company on the immovable property. Will the income generated from the company be taxed as gift tax?
From what we understand with the limited facts provided is that, an immovable property is settled in a trust. The settlor and beneficiaries are related as per section 56 of the Income-tax Act, 1961 (Act). This will not attract section 56(2)(x) of the Act.
Now, the trust has created a company which holds the immovable property. Any rental income earned from the immovable property will be taxable in the hands of the company. Dividends distributed to the trust will be taxable in the hands of the trust or beneficiary depending upon whether the trust is a discretionary or determinate trust.