If you want to help someone by giving your property partly or fully to someone for his benefit, then you can do so in two ways. Either you can make a gift of the property while you are alive or you can enjoy the property as long as you are alive and make a will to the person under a will which comes into force only after your death and before that No. Both modes have some advantages and disadvantages. Let’s discuss.
give away a gift
If you want the person to enjoy the benefits of the property immediately, then gifting it is the right way but you lose control of the property once and for all. A person can gift his self-acquired property to his will, which includes gifting in favor of an outsider. However, a Hindu cannot gift his share in the property of a Hindu undivided family, though he can give it to anyone, including an outsider.
Gift of a movable property can be made only by distribution whereas to make a gift of an immovable property you need to execute a gift deed and need to pay stamp duty on the market value of the property. Gift deed needs to be registered If the value of immovable property subject to gift exceeds one hundred rupees, it is practically mandatory for every transaction of immovable property subject to registration. Some states like Maharashtra levy a nominal stamp duty for gifts between certain blood relations. A gift given is not final until it is accepted by the proposed recipient.
If the person to whom you wish to give gifts does not fall under the categories of specified relatives and the value of gifts received by such person from all sources during the years exceeds fifty thousand rupees, then the total value of all gifts becomes income. Is. of the recipient without any limitation exemption. Please note that it is the recipient who has tax implications for such gifts but the donor does not have tax implications for gifts. Please note that unless the value of all gifts received during the year exceeds fifty thousand rupees, it will not be treated as income of the recipient.
testamentary through a will
After one’s death his property passes in two different ways. not in case will All properties owned by a person executed at the time of his death shall be passed on to his relatives in accordance with the provisions of the succession laws applicable to the deceased. If the will is executed by the deceased, then the property bequeathed under the will is inherited by the person(s) named in the will. If all the assets are not covered under the will, then the assets not covered under the will are inherited by the legal heirs of the deceased as per the succession law.
Under a gift, the transfer of ownership occurs immediately upon acceptance of the gift by the recipient whereas under a will the vesting of rights does not take place as long as the person making the will is alive. So under a will you are free to enjoy such property during your lifetime. A Will is neither required to be stamped nor it needs to be registered unlike a gift deed. Also, as we do not have any inheritance tax in India, the beneficiary does not have to pay any tax on the property under a will, so it is the cheapest way to transfer the inherited property to the desired person through a will. is the way.
It may be noted that under the law of succession applicable to a Hindu, there is no restriction on a person to inherit all his property to any person to the exclusion of his legal heirs.
which one is better for you
There cannot be a ready-made answer to this question as circumstances are different for everyone. But there are a few points you should keep in mind while deciding about the proper way to move your property. For example, if you only want to ensure that property owned by you is passed on to persons of your choice only after death and you want to enjoy and control those assets during your lifetime If so, the only solution is to bequeath your property through a will. appropriate manner. It is also advisable to make a will if you want to ensure smooth succession of your property to your legal heirs even after your death. If you want your property to go to persons who are not your legal heirs or want your legal heirs to inherit your property in a ratio different from that prescribed under personal law against making a will, then this is the right way. .
On the contrary if you want to help someone immediately then this can be ensured only by giving a valid gift. This will ensure instant gratification for the person in need. Gift mode should be used only when it is required in specific circumstances. Under no circumstances should you gift the whole or any major part of your property. Never gift your property for the sole purpose of saving tax. In my opinion, it is foolish to lose control of your property to save a few bucks in taxes. Transferring a part of your property by way of gift may be considered if you wish to see for yourself that some part of your property is distributed among your legal heirs while you are alive to ensure that There is no litigation around those properties.
Balwant Jain is a Tax and Investment Specialist and can be contacted at jainbalwant@gmail.com and @jainbalwant on Twitter.