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Tax Treatment of Gift under Income Tax Act

Income Tax25/08/2021 Source: Income Tax

 

Taxability of Gift 

In the following cases, any gift in the form of sum of money or property received by a person from any person (except from relatives or member of HUF) shall be taxable under the head "Income from other sources" under Income Tax Act.

1. Cash Gift

If any sum by the way of gift is received without consideration in excess of Rs. 50,000 during the previous year, the whole amount shall be chargeable to tax. So If the aggregate value of gift is less than Rs.50,000 than gift will be not taxable. If value the exceeds Rs. 50,000, the whole amount  of gift will be taxable.

2. Immovable Property as Gift

(1) If an immovable property is received as a gift without consideration and the stamp duty value exceeds Rs. 50,000, the stamp duty value of such property shall be chargeable to tax.

(2) If immovable property is received as a gift for consideration which is less than the stamp duty value of property by higher of following amount the difference is chargeable to tax.

  (i)  the amount of Rs. 50,000

  (ii)  the amount equal to 10% of consideration.

3. Movable Property as Gift

(1) If movable properties are received as a gift without consideration and the aggregate fair market value of such properties exceeds Rs. 50,000, the whole of aggregate fair market value of such properties shall be chargeable to tax

(2) If movable properties is received for consideration which is less than the aggregate fair market value of properties by an amount exceeding Rs. 50,000, the difference between the aggregate fair market value and the consideration is chargeable to tax.

Gifts not chargeable to tax

Any sum of money or property received as a gift by any person [on or after 01-04-2017] in the following circumstances shall not be chargeable to tax-

  1. Gifts received from relatives
  2. Gifts received by an individual on occasion of his/her marriage
  3. Gifts received by way of Inheritance/will
  4. Gifts received from any local authority
  5. Gifts received in contemplation of death of the payer
  6. Gifts received from any fund, foundation, university, educational institution, hospital, medical institution, any trust or institution referred to in Section 10(23C)
  7. Gifts received from any trust or institution registered under section 12A/12AA.
  8. Share received as a consequences of demerger or amalgamation of a company under clause (vid) or clause (vii) of section 47, respectively.
  9. Share received as a consequence of business reorganization of a co-operative bank under section 47(vicb)

Relative shall mean:

  1. Spouse of the individual
  2. Brother or sister of the individual
  3. Brother or sister of the spouse of the individual
  4. Brother or sister of either of the parents of the individual
  5. Any lineal ascendant or descendant of the individual
  6. Any lineal ascendant or descendant of spouse of the individual
  7. Spouse of the person referred in point B-F above

 

Nature of Gift Gifts received from relatives Gifts received from Non-relatives
Cash Gift Gift Not taxable Taxable (If above condition satisfy)
Immovable Property as Gift Gift Not taxable Taxable (If above condition satisfy)
Movable Property as Gift Gift Not taxable Taxable (If above condition satisfy)

 

Other Income taxable as Income from other sources-

S. No.

Nature of income taxable as other income

1.

Dividends

2.

Income by way of winnings from lotteries, crossword puzzles, races including horse races, card games, gambling or betting of any form or nature whatsoever

3.

Any sum received by an employer from his employees as contribution towards PF/ESI/ Superannuation Fund etc., if same is not deposited in the relevant fund and it is not taxable under the head "Profits and Gains from Business or Profession".

4.

Interest on securities, if not taxable under the head "Profits and Gains of Business or Profession"

5.

Income from machinery, plant or furniture belonging to taxpayer and let on hire, if income is not chargeable to tax under the head "Profits and Gains of Business or Profession"

6.

Composite rental income from letting of plant, machinery or furniture with buildings, where such letting is inseparable and such income is not taxable under the head ‘Profits and Gains of Business or Profession’

7.

Any sum received under Keyman Insurance Policy (including bonus), if not taxable under the head "Profits and Gains of Business or Profession" or under the head "Salaries"