Infosys founder N R Narayana Murthy lately gifted 15 lakh shares to grandson Ekagrah Rohan Murty valued at round Rs 240 crore, based on a regulatory submitting.
Murthy has gifted 15 lakh shares, or 0.04 per cent of his fairness holding, to Rohan Narayana Murty son Master Ekagrah Rohan Murty –making him the youngest billionaire shareholder of Infosys.
The worth of whole gifted shares come to round Rs 240 crore as per firm’s closing share worth of Rs 1,602.3 apiece.
Ekagrah is the third grandchild of Narayana Murthy.
His first two grandchildren are daughters of Akshata Murty and UK Prime Minister Rishi Sunak.
Although the specifics of this share switch stay undisclosed, just like different types of earnings, presents will be taxable beneath particular situations. However, exemptions from tax might apply to sure reward situations.
Similarly, in January 2024 Wipro founder Azim Premji transferred 1.02 crore fairness shares of Wipro held by him to his two sons –Rishad Premji and Tariq Premji– as a present.
What Rules Say On Gifting?
Under Section 56 of the Income Tax Act, that is the present taxation technique for presents within the recipient’s possession;
According to a report by Moneycontrol, money presents, immovable properties, and specified movable properties obtained with or without inadequate consideration from non-family are categorised as presents.
The worth of those presents is accounted for as ‘income from other sources’ and taxed based on your related earnings tax bracket. In the case of a present to a minor, the mother or father or authorized guardian assumes accountability for the tax obligation.
Money: Taxation is triggered solely once you obtain cash presents (in money, by way of cheque, and so forth.) totaling greater than Rs 50,000 in a 12 months. Below this threshold, no tax is relevant.
Therefore, should you obtain cash presents amounting to Rs 75,000 inside a 12 months, the complete sum—not simply the surplus over Rs 50,000 (Rs 25,000)—can be topic to taxation.
Movable property: If you obtain sure specified movable properties with out consideration (i.e., with out making any reciprocal fee) throughout a 12 months, and their whole honest market worth surpasses Rs 50,000, the complete quantity turns into taxable.
In instances the place you obtain specified movable properties for insufficient consideration (i.e. once you make some reciprocal fee), taxation applies to the distinction between the combination honest market worth and the consideration paid, supplied this differential quantity exceeds Rs 50,000. For instance, should you obtain jewelry and work value Rs 20 lakh in whole throughout a 12 months and pay Rs 12 lakh for them, Rs 8 lakh can be taxable.
It’s necessary to notice that taxation is relevant solely to specified movable properties, together with shares/securities, jewelry, archaeological collections, drawings, work, sculptures, any murals, bullion, and digital digital belongings (akin to cryptocurrencies).
Immovable property: When you purchase any immovable property (land and/or constructing) with out consideration (no reciprocal fee made), and its stamp obligation worth (property worth assessed by the federal government) exceeds Rs 50,000, the complete stamp obligation worth turns into taxable. For occasion, should you obtain a property with a stamp obligation worth of Rs 10 lakh as a present, the complete quantity can be topic to tax.
In instances the place you purchase immovable property for insufficient consideration (some reciprocal fee made), taxation applies to the distinction between the stamp obligation worth and the consideration paid, supplied this distinction exceeds Rs 50,000. For instance, should you obtain a property with a stamp obligation worth of Rs 25 lakh and make a fee of Rs 10 lakh, Rs 15 lakh can be taxed as a present.
It’s value noting that for cash presents and movable properties, the Rs 50,000 annual restrict (for every) applies to the entire worth of presents obtained in the course of the 12 months. However, for immovable property, the Rs 50,000 restrict applies to every property transaction. Therefore, should you obtain a number of properties as presents in a 12 months, and none of them surpasses the Rs 50,000 restrict, no tax is relevant.
When presents stay untaxed:
The Moneycontrol report added that within the situations outlined above, taxation is just relevant when presents are obtained from non-family and surpass the Rs 50,000 restrict (individually relevant for cash presents, movable properties, and immovable property).
According to the Income Tax Act, presents obtained from family are exempt from taxation, no matter their financial worth.
Who qualifies as a ‘relative’?
Let’s think about a hypothetical couple, H and W. H’s family embody a) H’s partner, b) H’s siblings, c) W’s siblings, d) H’s mother and father’ siblings, e) any direct ancestors or descendants of H or W, in addition to the spouses of b), c), d), and e).
Direct ancestors embody blood family akin to mother and father, grandparents, and nice-grandparents, whereas direct descendants embody kids, grandchildren, and so forth.
Gifts obtained within the context of marriage, via a will, or by way of inheritance are additionally exempt from taxation. It’s necessary to spotlight that marriage is the only event on which obtained presents stay untaxed. Gifts obtained on another event are liable to taxation.
Additionally, the exemption extends to cases the place funds are obtained from particular sources akin to funds, foundations, instructional and medical establishments (as outlined in part 10(23C)), or from charitable trusts and establishments (as specified beneath sections 12A, 12AA, and 12AB).
