Taxation of Gifts
Taxation of Gifts
The Government introduced gift tax by Gift Tax Act in the year 1958. The said Gift Tax Act was discontinued in the year 1998. Presently The Income Tax Act, 1961 is dealing with the taxation of gift.
Various type of Gifts:
The Gift can be in various mode like money, movable property and immovable property.
Movable property can be in the form of Shares and Securities, Jewellery, Archaeological collection, Drawings, Paintings, Sculptures any work of art and Bullion. Immovable property can be in the form of Land, Building or both.
Gifts under section 56(2)(vi):
If any sum of money received without consideration, the aggregate of which exceeds Rs.50,000, the whole of such sum will be chargeable
If any immovable property received –
Without consideration, the stamp duty value of which exceeds Rs.50,000, the stamp duty value of such property will be chargeable.
For a consideration, which is less than stamp duty value of property by an amount exceeding Rs.50,000, the stamp duty value of such property as exceeds such consideration will be chargeable.
If any property other than immovable property received –
Without consideration, the aggregate fair market value (FMV) of which exceeds Rs.50,000, the whole of aggregate FMV of such property will be chargeable.
For a consideration, which is less than the aggregate FMV by an amount exceeding Rs.50,000, the aggregate FMV as exceeds such consideration will be chargeable.
Provided that this clause shall not apply to any sum of money received;
from any relative; or (Explained below)
on the occasion of marriage of the individual; or
under a will or by way of inheritance; or
in contemplation of death of the payer.
There are certain exceptions to the gift that can be received from relative in case of Individual Assessee which are not taxable in the hand of the Individual Assessee.:
Relatives (Gift) U/s 56(2)(v) of the Income Tax Act,1961.
Author of the article can be reached at email@example.com Mr Anoop Biyani is a professional Chartered Accountant and Senior Consultant at BAKsource Financial Services.