Starting this year, property sub-registrars must report property gift deeds involving assets valued above ₹45 lakh to the tax department. According to reports from Mint, until the last financial year, only property sales, not gifts that did not involve a sale, were reported. As reported by Bhawna Kakkar, chartered accountant and founder of Kakkar & Co., registrars will now submit a Statement of Financial Transaction (SFT) with details of such transactions, which will reflect in the taxpayer's Annual Information Statement (AIS).
The move could affect taxpayers who ignore clubbing provisions in the tax law. As reported by Mint, under these rules, if an individual transfers an asset to their spouse, minor child or daughter-in-law without adequate consideration, any income arising from that asset must still be taxed in the hands of the original owner, not the recipient. Many individuals gift immovable property or investments to spouses to take advantage of lower tax slabs or avoid surcharge, but the law requires the original owner to report rental income and pay tax along with surcharge.
The disclosure will allow the tax department to verify whether any income or tax implications linked to the transfer have been properly reported. According to Prakash Hegde, a Bengaluru-based chartered accountant, the impact may be greater in cases involving complex misuse, particularly high-value transactions linked to unaccounted money. Hegde explained that some taxpayers may buy properties using cash in relatives' names in benami-like arrangements, which will now be easier to track.
Clubbing provisions do not apply when property is gifted to major children, parents or parents-in-law, where the recipient is responsible for paying tax on income or capital gains arising from the asset. As reported by Hegde, transactions where property is registered directly in a spouse's name from the outset are not captured as gifts and may escape this specific reporting mechanism. However, the added transparency could benefit genuine transactions by improving documentation and reducing disputes.
