Taxation Of Gifts Under Income Tax Act 1961

Post author:K M GATECHA CO LLP
Post published:25/08/2020
Post category:Income Tax Updates

Today we have explained taxation of gifts under Income Tax Act 1961 from relative. People are usually unaware of the taxation of the gifts which is most popular topic for many people.

Taxation of gifts under Income Tax Act 1961

Immovable property as gift:
- Received for inadequate consideration:
  - When any person received from any person or persons any immovable property for consideration ,difference of the consideration and fair market value of the property is taxable as income in the hands of the receiver if the difference is more than Rs.50,000.
- Received for without consideration:
  - When any person received from any person or persons any immovable property market value of which exceeds Rs.50,000 without consideration ,entire fair market value is taxable in the hands of receiver.
Taxation of CASH received as gift:
- Cash gift received more than Rs.50,000 entire amount is taxable.If received less than Rs.50,000 than nothing is taxable.
Exempt gifts:
- Any property or any sum of money received from any relative on the occasion of marriage of the individual or,
- Any property or any sum of money received by way of inheritance or will or,
- Any property or any sum of money received in contemplation of death of the donor or payer or
- Any property or any sum of money received from any local authority or
- Any property or any sum of money received from foundation or fund or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10 or
- Any property or any sum of money received from or by any trust or institution registered under section 12A or section 12AA or
- Any property or any sum of money received from any fund or trust or institution or any university or other educational institution or any hospital or other medical institution or
- Any property or any sum of money received by way of transaction not regarded as transfer under clause (i) or clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid) or clause (vii) of section 47 or
- Any property or any sum of money received from an individual by a trust created or established solely for the benefit of relative of the individual or
- Any property or any sum of money received any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto.
  - In the above relative means:
    - Spouse of Individual
    - Brother & Sister of Individual
    - Brother & Sister of Spouse of Individual
    - Brother & Sister of either of the parents of Individual
    - Any Lineal ascendants or descendants of the individual
    - Any Lineal descendants or ascendants of the spouse of the individual.
Taxation of movable properties:
- Received for inadequate consideration:
  - When any person received from any person or persons any property other than immovable property for consideration which is less than fair market value of the property,difference of the consideration and fair market value of the property is taxable as income in the hands of the receiver if the difference is more than Rs.50,000.
- Received for without consideration:
  - When any person received from any person or persons any property market value of which exceeds Rs.50,000 other than immovable property without consideration ,entire fair market value is taxable in the hands of receiver.

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