TAXABILITY OF GIFTS

Where an individual or HUF receives in any previous year from any person or persons any sum of money without consideration, any immovable property without consideration, any property other than immovable property without consideration or for inadequate consideration then such shall be chargeable to tax under the head ‘Income from other sources’. It should be noted that these are taxable in the hands of recipient only.

Following three kinds of gifts received by an Individual or HUF shall be taxable under the Income from other sources [Section 56(2)(vii)]

(i)                  Sum of Money:- Any sum of money the aggregate value of which exceeds Rs.50000 received without consideration shall be taxable in the hands of recipient.

(ii)                Immovable property without consideration:- Any immovable property received without  consideration by an Individual or HUF the stamp duty value of which exceeds Rs. 50000, the stamp duty value shall be taxable in the hands of recipient.

(iii)             Property other than immovable property:-

(a)   Without consideration:- Where any property other than immovable property is received by an Individual or HUF the aggregate fair market value of which exceeds Rs. 50000, the whole of aggregate fair market value shall be taxable in the hands of recipient.

(b)    Acquired for Inadequate consideration:- Where any property other than immovable property is acquired for a consideration which is less than the fair market value by an amount exceeding Rs. 50000, the aggregate fair market value as exceeds such consideration shall be taxable in the hands of recipient.

Circumstances when such gift shall not be chargeable to Tax:

Where sum of money or property is received:

(i)                  From relative;

(ii)                On the occasion of marriage;

(iii)               Under a will or by inheritance;

(iv)              In contemplation of death of payer;

(v)                From any local authority;

(vi)              From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section 10(23C) or

(vii)             From any trust or institution registered u/s. 12AA.

 Definition of Relative (as amended by Finance Act, 2012):

(i)                  Spouse of the individual;

(ii)                Brother or sister of the individual;

(iii)               Brother or sister of the spouse of the individual;

(iv)              Brother or sister of either of the parents of the individual;

(v)                Any lineal ascendant or descendant of the individual;

(vi)               Any lineal ascendant or descendant of the spouse of the individual;

(vii)             Spouse of the person referred to in clause (ii) to (vi)

(viii)           In case of HUF, any member of HUF (as inserted by Finance Act, 2012)

Meaning of Property

(i)                  Immovable property being land or building or both;

(ii)                Shares and securities;

(iii)               Jewellery;

(iv)              Archaeological collections;

(v)                Drawings;

(vi)              Paintings;

(vii)             Sculptures;

(viii)           Any work of art;

(ix)              Bullion.

Meaning of Stamp duty value:

Stamp duty value means the value adopted or assessed or assessable by any authority of the Central Government or State Government for the purpose of payment of stamp duty in respect of an Immovable property.

This Article has been Shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com