Property Gifts Above ₹45 Lakh Now Under Tax Department Lens

Gifting immovable property has always been a common practice in India, whether it’s a parent transferring a house to their child or spouses gifting each other property. However, recent regulatory changes have brought such transactions under sharper scrutiny. Property gift deeds valued at over ₹45 lakh will now be flagged by sub-registrars and reported to the Income Tax Department. This move is part of an effort to increase transparency and ensure compliance with income tax rules, especially the clubbing provisions under the Income Tax Act.

In this article, we’ll explore the implications of this regulatory change, how it impacts taxpayers and investors, and what steps you can take to stay compliant while navigating this new landscape.

The ₹45 lakh reporting threshold ties directly into the government’s broader push for better tax compliance. Under the new regulation, property gift deeds valued above this amount will automatically appear in the donor’s Annual Information Statement (AIS). This document, accessible through the Income Tax Department’s online portal, provides a consolidated view of a taxpayer’s high-value transactions, making it easier for authorities to detect discrepancies.

Why the Focus on Gifting?

While gifting property to certain relatives (like spouses, children, or parents) is exempt from gift tax, it is not entirely beyond the tax department’s purview. This is because income generated from the gifted asset—such as rent—may still be clubbed with the donor’s income for tax purposes. The ₹45 lakh reporting rule ensures that such transactions are monitored to prevent misuse or tax evasion tactics, such as transferring property to avoid higher income tax slabs.

To avoid penalties or inquiries, taxpayers gifting property over ₹45 lakh need to adopt meticulous documentation practices. Here’s a step-by-step guide to ensure compliance:

For real estate investors, this regulation could have indirect implications. High-value property transactions may slow down, especially in urban markets where compliance costs and potential liabilities could deter gifting. Investors should also monitor the effect on related sectors, such as housing finance companies and REITs, which could experience shifts in market sentiment.