Taxability of Gifts In India

GIFT TAX: The tax levied on the gifts that you have received in money or its worth and which is over and above a certain set limit by the Indian law is known as gift tax. Income tax on gifts helps regulate the gives which is given to you by a person who is not a close relative as per the definition of Income Tax Law of India. These gifts include tangible, intangible, movable and immovable assets which can be given voluntarily and without considering it in money or it’s worth. There are, however, some gifts which are exempt from taxes.

TAXATION OF GIFTS: SECTION 56(2) OF THE INCOME TAX ACT, 1961

Category I	Sum of money (gift in cash/cheque/draft) without consideration	Aggregate money received exceeding Rs. 50,000/-	Whole aggregate money is taxable
Category II	Immovable propertywithout consideration	Immovable property received and SDV exceeds Rs. 50,000	Stamp duty value is taxable
Category III	Immovable property with consideration	A.Y. 2018-19 SDV > consideration & (SDV- Consideration) >50,000 A.Y. 2019-20 SDV >105% of consideration & (SDV-Consideration) >50,000	(SDV- Consideration) is taxable
Category IV	Movable property without consideration	Aggregate FMV of movable property exceeds Rs. 50,000	Whole aggregate FMV is taxable
Category V	Movable property with consideration	Aggregate (FMV- consideration) > 50,000	(Aggregate FMV – Consideration) is taxable

EXEMPTED GIFTS:

1. Any sum of money received (as gift) without consideration up to Rs. 50000/- in one year is not taxable.

2. Following receipts without consideration are exempt

a) Gifts received from ant relative

b) Gifts received on occasion of marriage of an individual

c) Gifts received under a will or by way of inheritance

d) Gifts received in contemplation of death of payer

e) Gifts received from local authority as defined in explanation to section 10(20)

f) Gifts received from educational or medical institution or fund etc. referred to u/s 10(23C)

g) Gifts received by any fund/ trust/ institution/ university/ other educational institution /hospital/ other medical institution referred to in sub-clause (iv) or (v) or (vi) or (via) of clause (23C) of section 10

h) Gift received by way of transactions not regarded as transfer under section 47(i)/ (iv)/(v)/(vi)/ (via)/ (viaa)/(vib)/(vic)/(vicb)/(vid)/(vii)

i) Gifts received from an individual by a trust created or established solely for the benefit of relative of the individual.

DEFINITIONS:

1. Relatives: As per the Income tax act, the sum of money received from any of your relatives are fully exempt from tax. Here the “relatives” term defines by the Income Tax act as follows :

• Spouse of the individual
• Brother or sister of the individual
• Brother or sister of the spouse of the individual
• Brother or sister of either of the parents of the individual
• Any lineal ascendant or descendant of the individual
• Any lineal ascendant or descendant of the spouse of the individual
• Spouse of the person referred to in clauses (ii) to (vi).
• In case of a Hindu undivided family, any member thereof;

2. Immovable property

• being land or building or both
• Shares and securities,
• Jewelry,
• Archaeological collection,
• Drawings,
• Paintings,
• Sculptures,
• any work of art or

3. Only single transaction is considered for calculating threshold limit of Rs.50000/- in the case of immovable property received as a gift. Where as in other cases (cash or movable property) all transactions in financial year are taken into consideration for calculating threshold limit of Rs.50000/-.

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

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