Summary : A receipt of property without consideration or for inadequate consideration can create two separate tax questions under the Income-tax Act, 2025. The first arises when the property is received. Section 92(2)(m) may deem money, immovable property or specified movable property to be income from other sources when the relevant ₹50,000 and valuation tests are crossed, unless a statutory exception applies. The second arises when the recipient later transfers that property. Section 73 determines the capital-gains cost. A pure gift covered by an exception does not normally give the recipient a fresh market-value cost; table item 1 generally carries forward the previous owner’s cost together with eligible improvement cost. In contrast, table item 17 provides that where a property’s value was taken into account under section 92(2)(m), that value becomes the recipient’s cost for the later capital-gains computation. The distinction prevents the same taxed value from being ignored later, while preserving carry-over basis for an exempt gift. Documentation should therefore establish the receipt category, relationship or other exception, consideration, stamp-duty value or fair market value, amount actually taxed and the previous owner’s cost history. A gift deed alone does not resolve both stages.
- Section 92 Tests the Recipient at the Date of Receipt
- The Agreement-Date Stamp Value Rule Needs Payment Evidence
- Statutory Exceptions Depend on the Transferor and Occasion
- Relative status should be mapped, not assumed
- Will, inheritance and contemplation of death
- Section 73 Sets Two Different Capital-Gains Cost Paths
- Pure gift or inheritance: previous-owner cost generally carries over
- Value taxed under section 92: taxed value becomes cost
- One Transaction Can Require Two Evidence Files
- Receipt and Basis Control Checklist
- Frequently Asked Questions
- Is every gift above ₹50,000 taxable?
- How is an underpriced immovable-property receipt tested?
- Can the agreement-date stamp value be used automatically?
- Does the value written in a gift deed become capital-gains cost?
- What cost applies if the recipient paid tax under section 92?
- Should a donor’s purchase papers be retained after the gift?
- Does section 73 determine the entire future capital gain?
- Key Takeaways
Section 92 Tests the Recipient at the Date of Receipt
Section 92(2)(m) applies to a person who receives specified money or property in the circumstances stated in the provision. For money received without consideration, the whole aggregate is taxable when it exceeds ₹50,000. For immovable property received without consideration, the stamp-duty value is taxable when it exceeds ₹50,000. For immovable property bought below stamp-duty value, the excess is taxable only when it exceeds the higher of ₹50,000 and 10% of the consideration. Specified movable property uses fair market value rather than stamp-duty value: the whole aggregate fair market value may be taxable when received free, while the excess over consideration may be taxable when received at an undervalue and that excess exceeds ₹50,000.
These tests are not interchangeable. The ₹50,000 amount is an aggregate threshold for money and relevant movable property, but immovable property is tested transaction by transaction under its own clauses. For underpriced immovable property, the comparison is not simply whether the stamp-duty value is more than ₹50,000 above price; the 10% safe margin may be larger. The receipt date, agreement date, payment mode and valuation evidence should be fixed before the return position is decided.
| Receipt | Section 92 trigger | Amount potentially taxed |
|---|---|---|
| Money without consideration | Aggregate exceeds ₹50,000 | Whole qualifying aggregate |
| Immovable property without consideration | Stamp-duty value exceeds ₹50,000 | Stamp-duty value |
| Immovable property for inadequate consideration | Excess over price exceeds higher of ₹50,000 or 10% of price | Stamp-duty value less consideration |
| Specified movable property without consideration | Aggregate fair market value exceeds ₹50,000 | Whole qualifying aggregate FMV |
| Specified movable property at undervalue | Aggregate FMV excess over price exceeds ₹50,000 | FMV less consideration |
The Agreement-Date Stamp Value Rule Needs Payment Evidence
For underpriced immovable property, section 92 permits the stamp-duty value on the agreement date to be used where the agreement date and registration date differ, but only when the prescribed consideration condition is met. The statutory text requires part or all of the consideration to have been paid by the specified banking or electronic modes on or before the agreement date. A back-dated agreement or a cash payment does not establish the condition. Retain the agreement, bank statement, payment instrument, registration document and both relevant stamp values.
Where the assessee disputes the stamp-duty value and the statutory conditions are met, the valuation-reference mechanism should be considered under the applicable provision rather than substituting a private estimate without authority. The return file should record the value used, the statutory reason and any reference or appellate position. A later reduction in value should not be silently inserted into the original computation without examining procedural consequences.
Statutory Exceptions Depend on the Transferor and Occasion
Section 92 excludes specified receipts, including receipts from a relative, on the marriage of the individual, under a will or by inheritance, in contemplation of the payer’s death, from a local authority and from or by specified registered non-profit entities and other listed persons. Each exception has its own conditions. A socially close person is not necessarily a statutory relative, and a wedding anniversary or another family function is not the individual’s marriage. The evidence should identify the transferor, recipient, relationship, occasion and legal instrument rather than relying on a narration such as family gift.
Relative status should be mapped, not assumed
For an individual, the statutory relative definition covers identified family relationships and specified spouses. For a Hindu undivided family, receipt from a member falls within the relevant rule. A relationship chart, identity records and, where necessary, marriage or birth records should support the conclusion. The exception addresses tax at receipt; it does not prove ownership, title, source of funds, genuineness or compliance with other law.
Will, inheritance and contemplation of death
A testamentary or inheritance receipt should be supported by the will, probate or succession material where applicable, death certificate, asset transmission records and cost history. A transfer described as being in contemplation of death requires the legal and factual conditions of that concept; it should not be used as a general label for a gift to an elderly or ill person. Civil-law validity and tax classification are connected but distinct reviews.
Section 73 Sets Two Different Capital-Gains Cost Paths
Pure gift or inheritance: previous-owner cost generally carries over
Section 73 table item 1 covers a capital asset that became the assessee’s property by gift, will, inheritance or the other listed modes. The cost is generally the cost for which the previous owner acquired the property, increased by eligible improvement cost incurred by the previous owner or the assessee. The recipient should therefore obtain historical purchase documents, improvement invoices and the ownership chain at the time of receipt. The market value written in a gift deed is not automatically the tax cost.
Value taxed under section 92: taxed value becomes cost
Section 73 table item 17 applies when a property’s value has been taken into account for section 92(2)(m). The cost of acquisition is the value taken into account under that provision. This rule is important for an underpriced purchase or a taxable non-relative gift: the amount actually brought into the section 92 computation supplies the later basis. The return and assessment record should be preserved because a future reviewer needs the value that was taxed, not merely a contemporary valuation report.
| Receipt-stage result | Future section 73 cost starting point | Key record |
|---|---|---|
| Exempt gift from statutory relative | Previous owner’s cost under table item 1, subject to the law | Donor purchase and improvement records |
| Inheritance or will | Previous owner’s cost under table item 1 | Succession documents and historical cost |
| Taxable property receipt under section 92(2)(m) | Value taken into account under section 92, table item 17 | Filed computation and tax/assessment record |
| Underpriced property partly taxed under section 92 | Section 92 value taken into account, not merely cash price | Sale deed, stamp or FMV evidence and return working |
One Transaction Can Require Two Evidence Files
The receipt-stage file should contain the transfer instrument, consideration trail, stamp-duty or fair-market value, relationship or exception evidence, computation and return disclosure. The future-transfer file should preserve that material plus the previous owner’s purchase and improvement records or the value actually taken into account under section 92. Keeping only the latest registered deed creates risk because it may show neither the donor’s original cost nor the amount taxed at receipt.
Other provisions may affect the ultimate capital gain, including the character of the asset, holding period, improvement cost, special rules for depreciable assets, land or shares, and the law governing indexation or rates in the year of transfer. Section 73 supplies the cost rule but does not itself answer every later capital-gains issue. The recipient should avoid promising a tax-free gift or a stepped-up cost without a complete review of both stages.
Receipt and Basis Control Checklist
- Identify whether the receipt is money, immovable property or specified movable property.
- Record consideration, receipt date, agreement date, registration date and payment modes.
- Apply the correct ₹50,000, 10%, stamp-duty-value or fair-market-value test.
- Document the precise statutory exception and relationship or occasion evidence.
- Preserve the section 92 value actually reported or assessed if income was recognised.
- Collect the previous owner’s cost and improvement records for a carry-over-basis receipt.
- Revisit holding period, rate and other capital-gains rules only when a later transfer occurs.
Frequently Asked Questions
Is every gift above ₹50,000 taxable?
No. Section 92 contains different tests by asset type and statutory exceptions, including qualifying receipts from relatives, on marriage, under a will or by inheritance.
How is an underpriced immovable-property receipt tested?
The stamp-duty value excess over consideration must exceed the higher of ₹50,000 and 10% of the consideration before the section 92 trigger applies.
Can the agreement-date stamp value be used automatically?
No. Where agreement and registration dates differ, the specified non-cash payment condition on or before the agreement date must also be satisfied.
Does the value written in a gift deed become capital-gains cost?
Not automatically. For a qualifying gift, section 73 table item 1 generally uses the previous owner’s cost, subject to the statutory rules.
What cost applies if the recipient paid tax under section 92?
Section 73 table item 17 uses the property value that was taken into account under section 92(2)(m).
Should a donor’s purchase papers be retained after the gift?
Yes. They may be essential to establish carry-over cost and eligible improvement cost when the recipient later transfers the asset.
Does section 73 determine the entire future capital gain?
No. It addresses cost rules, while holding period, transfer value, improvement, indexation, rates and asset-specific provisions require separate review in the transfer year.
Key Takeaways
- Section 92 first tests whether value received without or below consideration is taxable.
- Immovable property uses stamp-duty value and a higher-of-₹50,000-or-10% rule for underpricing.
- A statutory exception must be supported by the transferor, relationship, occasion and instrument.
- A pure gift generally carries previous-owner cost; a value taxed under section 92 becomes cost under section 73.
- Preserving both receipt-stage and historical-cost records avoids a future basis dispute.
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Disclaimer: This article is a general educational explanation of section 92(2)(m) and section 73 of the Income-tax Act, 2025, checked on 14 November 2026. It is not tax, valuation, property, succession, family-law, foreign-exchange, stamp-duty, registration or investment advice and does not determine the treatment of any gift, inheritance, settlement, trust distribution, underpriced purchase, immovable property, share, security, jewellery, artwork or other asset. The result depends on the identity and status of the transferor and recipient, statutory relationship, occasion, legal instrument, genuineness, consideration, receipt and agreement dates, payment mode, stamp-duty value, prescribed fair market value, valuation procedure, amount actually offered or assessed and the law for the relevant tax year. Civil-law validity, title and source-of-funds questions remain separate. The future capital-gains computation may depend on the asset character, holding period, prior owner, improvement expenditure, depreciation, indexation rules, rate provisions and the law in force when the asset is transferred. Readers should not treat a value in a deed as automatic tax cost or assume that a receipt-stage exception creates a fresh market-value basis. Official forms, rules, valuation methods, judicial interpretations and procedural requirements may change, and disputes over stamp value or relationship require case-specific advice. Parties should verify the current Act and Rules, retain original transfer, banking, valuation, return and historical-cost records, and consult qualified tax, legal and valuation professionals. TaxGuru accepts no responsibility or liability for any tax demand, interest, penalty, valuation difference, denied exception, incorrect capital-gains cost, title dispute, compliance failure or other loss arising from reliance on this article, incomplete facts, missing records or subsequent legal, factual or administrative changes.
