The Finance Bill, 2017 had proposed a new Section 194IB to the Income Tax Act, 1961 (the "Act"), to provide that individuals and Hindu Undivided Families ("HUFs") paying rent of INR 50,000 (Indian Rup...
The recent Buckeye Trust case has sparked significant debate within the tax and estate planning community.
Under the current tax framework, transfer of assets to a family trusts created solely for the benefit of relative beneficiaries being are generally exempt from deemed gift tax provisions. Interestingly, the Bangalore tribunal ruled that a trust with a residuary clause allowing the addition of any person as a beneficiary did not qualify for the prescribed exemption from deemed gift tax provision. The tribunal also categorized an interest in a partnership firm as "shares and securities" for deemed gift tax purposes.
The tribunal, on its own motion on January 7, 2025, recalled the entire order for a fresh hearing due to certain inadvertent errors in the original order. This matter is now fixed for hearing on February 19, 2025. The final decision will be curiously watched and considered for undertaking estate planning.
INDUSLAW's Lokesh Shah, Gaurav Goyal, and Aarya Jha summarise and analyse the current tax framework and the ruling of the Bangalore tribunal.
