When Gift is it taxable
- Gifts received by an individual or Hindu Undivided Family (HUF) are taxable as per the Income Tax Act, 1961 but there are a few exceptions as mentioned below. It is included under the head “Income from other sources” under Section 56(2)(viii)
- Gifts are taxable in the hands of recipient and there is no taxation for the donor.
Cases for taxation
- Any cash gift (including gifts by cheque or drafts) received, exceeding Rs. 50,000/-
- Any movable property received without consideration or at a lesser consideration than its fair market value, the aggregate fair value of which is more than Rs.50,000/-
- Any immovable property received without consideration and its stamp duty value is more than Rs.50,000/-
- Any immovable property received for a consideration which is less than the stamp duty value of the property by an amount
- which is more than Rs. 50,000/-, the difference between the stamp duty value & the consideration shall be chargeable to tax
- In the case of immoveable property, a single transaction is considered for calculating the limit of Rs.50,000/-
- In other cases , all transaction in a financial year will be considered for calculation of the ceiling limit of Rs. 50,000/-
The following receipts/gifts are exempted even if they are without or inadequate consideration -
- From any relative; or
- On the occasion of marriage of an individual; or
- Under a will or by way of inheritance; or
- In contemplation of the death of the payer or donor, as the case may be; or
- From a local authority; or
- From any fund, foundation, university, other educational institution, hospital, medical institution, any trust or institution referred to in Section 10 (23C)
- Relative means spouse, brother or sister of assessee or spouse, brother or sister of either of the parents, any lineal ascendant or descendant of the assessee or spouse.
- For HUF relative means members of HUF
- Property means immoveable property being land or building or both; shares & securities; jewellery; archeological collections; drawing, paintings, sculptures; any work of art and bullion.
- In few case clubbing provisions are also applicable so also read clubbing provision under Income Tax