No gift deed needed for movable asset

SC Vasudeva

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Q. This is with reference to a reply given in this column in The Tribune dated May 11, 2015, on the gift of shares. My queries are as under:

i) If I gift shares to my parents from my demat account to their demat account, would the income/capital gains generated be clubbed with my income or will it become due in the hands of my parents?

ii) Is it mandatory to make a gift deed in case a gift is being given to parents? Is it necessary to get the gift deed registered in case the shares are gifted to parents and STT is already paid or an offer of gift and acceptance on an ordinary paper would work?

— Rohit

A. Your queries are replied as under:

(a) No capital gain arises in case a property is gifted to someone. A gift of shares to parents from a demat account of the donor to the demat account of the donee would not have implications of the clubbing of income. The provisions of clubbing the income are applicable in case of a gift to a spouse or a minor child.

(b) No gift deed is required to be executed for gift of a movable property. Therefore, a simple letter of making the gift by the donor and a letter from the donee accepting such gift should be sufficient for the gift of a movable property.

Q. a) I am 72 years of age and citizen of India and permanent resident of New Zealand.

b) Being the citizen of India and permanent resident of New Zealand, can I open a bank account in New Zealand?

c) Can I transfer my capital to New Zealand for doing a business or to take a property or purchase some shares from a company or I have to take permission from RBI or some other institutions in India?

d) What are the formalities for Income-tax after doing business over there as I am assessee in India for the past 40 years?

e) Can my son, who is a citizen of New Zealand for the past 8 years, gift money over there for doing business, as there is no gift tax in that country for their near relatives.

f) Will I be considered as an NRI while staying there for more than 185 days? After becoming an NRI, can I transfer my money from India which is less than Rs 2.5 lakh?

— Agyapal Singh Bajaj

A. a) It seems you are settled in New Zealand and are holding an Indian passport. If my presumption that you are settled in New Zealand is correct, it should be possible for you to open a bank account in New Zealand.

b) There should not be a difficulty in starting a business in New Zealand if you are settled there subject, however, to the compliance, if any, required by the law prevailing in New Zealand in this regard.

c) You can purchase a residential or a commercial property in India. You can also purchase shares of various companies in India subject to the limits laid down by the SEBI.

d) You can carry on business in New Zealand subject to requirement in (b) above. The income from such business will be included in the total income to be declared in India for a financial year provided you are a resident in India for a particular financial year in accordance with the provisions of the Income-tax Act, 1961 (The Act). In case you are a non-resident in accordance with the provisions of the Act, income earned in New Zealand would not be taxable in India.

e) In case the New Zealand Government does not have any prohibition for gifting an amount to an Indian citizen, there should not be any problem for such a gift from Indian perspective.

f) In case you become a non-resident Indian in accordance with the provisions of the Act, you should be able to transfer the amount of Rs 2.5 lakh to New Zealand without any problem.

Q. I shall be obliged if you could give details of those measures of preventive health check-up envisaged under Section 80D to qualify for deduction of Rs 5,000.

— Manjit Singh

A. No clarification has been issued by the Central Board of Direct Taxes with regard to the nature of preventive health check-up envisaged under Section 80D of the Income-tax Act, 1961 (The Act). This should, therefore, cover the amounts charged by various hospitals which provide a wide range of preventive health check-up. For example, Apollo Hospital in Delhi has a scheme of executive health check-up which is recommended by them to be taken up every year so as to avoid any mishap in the years to come.