Transfer Tax

Transfer Tax in other words implies the tax imposed on the handing over of the title of property ownership by one person to another. It incorporates a legal transaction fee, which is involved with the title to property being transferred from one to another. This tax is not very common form of taxation and is imposed where the registration of the transfer involves a legal requirement. Such are generally found to be associated with transfers of real estate, shares, or bond. Although Stamp Duty and the Real Estate Transfer Tax are examples of the Transfer Tax, it should be noted that the fees paid to the notaries during any legal jurisdictions are not treated as transfer tax.

In the United States the Transfer Tax is more commonly referred than in the eastern countries. There the Estate Tax and Gift Tax both falls under the category of the Transfer Tax. This is because under both these taxes a charge on the transfer of title of property from one person or entity to another person is levied. Since the year 1900, it has been ratified by the United States Supreme Court that by Estate Tax one should acknowledge a tax on the property transferred due to death of the owner and not on the property itself. Ever since this, the Transfer Tax is been treated as an Indirect Tax along with the Estate Tax and the related Gift Taxes.

Types of Transfer Taxes:

There are different types of Transfer Tax that involves a certain payment on the transfer of the title of the property, like -

• Estate tax
• Gift tax
• Capital gains tax
• Sales tax on goods excluding the sales tax payment on services
• Certain use taxes

Transfer Tax in India:

Transfer Tax in India involves the provision for collecting tax from cross-border mergers and acquisitions occurring for the benefits of the Indian company. According to the taxation laws in India, there stands a theory that the nation should have a share of the profit from the transactions that are being carried out within the country. As per the current legislation provisions of India there are taxation on the gains arising from the transfer of the legal ownership of the capital asset. This transfer can take place in any form like that of sale, relinquishment, exchange, extinguishing of any rights therein, or compulsory acquisition under any law. It should be noted that gains from transfer of a capital asset with in India shall be deemed to fall or rise in India. In the case of cross - border transfers generally the status of the capital asset provides the way out to decide as to which of the states involved in the contract has the right to tax such income. Still, it should be noted that the concept of Transfer Tax is still not developed in strict terms in India.

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