Regarding income tax, two types of assets must be kept in mind
- House Property and
- Capital Assets.
1Income from house property is taxable if the assesse is the owner of a property that’s been given out on rent. The property should not be used for business or professional purposes. Individuals and HUFs can claim one property as self-occupied, which means you and your family live there, and do not have to pay taxes on this.
Learn more about how income from house property is taxed here
2Income from capital assets is taxable if there has been any gain in the transfer of capital assets. Capital assets are property of any value that’s held by the assesse like land, buildings, equity shares, bonds, debentures, jewellery, art, assets, etc.
Learn more calculating capital gains here
3Any transfer of assets to close relatives (parent, spouse, sibling, lineal ascendant/descendant) is not taxed. This rule can be used to transfer assets to others to whom a lower tax bracket applies or who do not pay any tax to save tax on certain assets
4Section 64 of the Income Tax act specifically deals with this. It contains provisions which deal with clubbing of income. These make it clear that which any income from investment made or assets purchased in the name of close relatives (spouse, minor child or daughter-in-law) is clubbed with the income of the person making the investment and taxed accordingly .
5This applies to all types of investments such as shares, fixed deposits, land, building, post office savings and mutual funds.
Read more here
What will happen after the case? How will the govt recover the assets?
The Government can use the Criminal Law Amendment Ordinance, 1944 to ‘attach’ or basically take over property which has been obtained as a result of corruption or similar offences. Even if the exact property cannot be recovered, the government can take over property of similar value.
Even if this property has been transferred to someone else, the Government can still recover it if the transfer seems fake (for example, if the transfer was made for a much lower price).
Property of this nature can be ‘attached’ the moment a court takes notice of a case. It will remain in Government control till a final decision is made by the Court – if the person is found not guilty, the property is released. If he is found guilty, the amount of property gained as a result of criminal acts will be forfeited to the government.