Taxability of Gifts as per Income Tax Act 1961

 taxability-of-tax

If you receive gifts in the form of money and property from any of your relative or friends, it may be taxable Income in certain situations.

Section 56(2)(x) inserted by finance at 2017 provides for taxability of gifts received on or after the 1st day of April, 2017.

Here is the wording of law read as under?

Where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,

  • Any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
  • Any immovable property,
  • Without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
  • For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration:
  • Any property, other than immovable property,
  • Without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;
  • For a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration

Exceptions to taxability of Gifts

The clause mentioned above for taxability of gifts shall not apply to any sum of money or any property received—

  1. From any relative.
  2. On the occasion of the marriage of the individual.
  3. Under a will or by way of inheritance
  4. In contemplation of death of the payer or donor, as the case may be
  5. From any local authority
  6. From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution
  7. From or by any trust or institution registered under section 12A or section 12AA
  8. By any fund or trust or institution or any university or other educational institution or any hospital or other medical institution.

Conclusion: In brief we can conclude that where any person receives, gifts valued at more than Rs. 50,000 a year, then such exceed amount is taxed as income except the few exceptions provided above. These gifts may be in any form – cash, jewellery, movable and immovable property etc.

 

Disclaimer – the above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.

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