Article explains Income Tax Treatment of Immovable Property Received as Gift Without Consideration or for Inadequate Consideration, Any property other than immovable property received Without consideration of For Inadequate Consideration, Gifts from Friends and Unrelated Persons, Gift from Relatives, Gifts Received at Wedding, Gift Received As Inheritance, Money Received in Contemplation of Death, Gift Received from Local Authority or Charitable Trust and Gifts Received at the time of termination of employment.
Page Contents
- Immovable Property Received as Gift:
- Any property other than immovable property:
- Gifts from Friends and Unrelated Persons
- Deduction for Gift
- Gift from Relatives
- Gifts Received at Wedding
- Inheritance is NOT Taxable
- Money Received in Contemplation of Death
- Gift Received from Local Authority or Charitable Trust
Immovable Property Received as Gift:
a) Without Consideration:
Where any person receives, in any previous year, from any person or persons any immovable property without consideration and the stamp duty value of which exceeds fifty thousand rupees then in such case, the stamp duty value of such property will be taxable in the hands of receiver.
b) For Inadequate Consideration:
Where any person receives, in any previous year, from any person or persons any immovable property for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts:
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to five per cent of the consideration
The excess differential amount will be taxable in the hands of receiver.
Any property other than immovable property:
a) Without consideration:
Where any person receives, in any previous year, from any person or persons 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 will be taxable in the hands of receiver.
b) For Inadequate Consideration:
Where any person receives, in any previous year, from any person or persons any property other than immovable 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.
The excess differential amount will be taxable in the hands of receiver.
Income tax is not applicable on gifts received from relative. (Meaning of ‘relative’ is provided below). Friends do not fall under the definition of relative as per Income Tax Act. Thus, gift received from friends will be charged to tax if it exceeds the threshold.
Deduction for Gift
Gifts received from relatives is not taxable and there is no limit on the amount of money that can be received as gift from relative that is not chargeable to income.
However, money received without consideration by an individual or HUF from any other persons other than a relative is chargeable to tax if the aggregate value of the money received during a year exceeds Rs. 50,000.
Hence, if the total value of gifts received by a person exceeds Rs. 50,000 in a year and he/she did not receive the money as a gift for wedding, then the entire amount received by the taxpayer will be taxed.
Example
If a taxpayer received a gift of Rs.45,000 during his/her birthday from a friend, the entire amount of Rs.45,000 will NOT be taxable under income tax.
On the other hand, if a taxpayer receives a gift of Rs.55,000 during his/her birthday from a friend, the entire amount of Rs.55,000 will become taxable under income tax, as it exceeds the threshold.
Gift from Relatives
Gift from relatives are not taxable under the Income Tax Act. As per the Income Tax Act, the following list of persons are defined as a relative of an individual. Hence, only money received from the following persons will be exempt from income tax for an individual taxpayer.
1. Spouse of the individual.
2. Brother or sister of the individual.
3. Brother or sister of the spouse of the individual.
4. Brother or sister of either of the parents of the individual.
5. Any lineal ascendant or descendent of the individual.
6. Any lineal ascendant or descendent of the spouse of the individual.
7. Spouse of the persons referred to in (2) to (6).
In case of HUF gift received from any of the member of the HUF is exempt from Income Tax.
List of Relatives from Whom Gift is Exempt
| Father (Papa or Pitaji)
Mother (Maa or Mummy) Brother (Bhai) Sister (Bahin) Son (Beta or Putra) Daughter (Beti or Putri) Grand Son (Pota or Potra) Grand Daughter (Poti or Potri) Husband (Pati) Wife (Patni) Sister’s Husband (Jija) Brother’s Wife (Bhabhi) Wife’s Brother (Sala) Wife’s Sister (Sali) Husband’s Brother (Dewar) Husband’s Sister (Nanad) Mother’s Brother (Mama) Mother’s Sister (Mausi) Mother’s Sister Husband (Mausa) Wife’s brother’s wife (Sala Heli) Father’s Brother (Chaha or Tau) Father’s Brother’s Wife (Chachi or Tai) Father’s Sister’s Husband(Fufa) Father’s Sister (Bua) Grand Father (Dada) |
Grand Mother (Dadi)
Great Grand Father (Pardada) Great Grand Mother (Pardadi) Daughter’s Husband (Jawai) Son’s Wife (Bahu or Putra Vadhu) Wife’s Father (Sasur) Wife’s Mother (Sas) Husband’s Father (Sasur) Husband’s Mother (Sas) Wife’s Grand Father (Dada Sasur) Husband’s Grand Mother (Dadi Sas) Husband’s Grand Father (Dada Sasur) Wife’s Grand Mother (Dadi Sas) Wife’s Great Grand Father (Bada Dada Sasur) Husband’s Great Grand Mother (Badi Dadi Sas) Husband’s Great Grand Father r (Bada Dada Sasur) Wife’s Great Grand Mother (Badi Dadi Sas) Mother’s Brother’s Wife (Mami) Brother’s Wife (Bhabhi) Husband’s Brother’s Wife (Devrani or Jithani) |
Gifts Received at Wedding
Money and gifts received by an individual taxpayer on the occasion of his/her marriage is exempt from income tax.
Inheritance is NOT Taxable
Money received by way of Will or by way of inheritance is exempt from income tax. Hence, no income tax will be payable on any movable or immovable assets inherited, consequent to the demise of a relative.
Money Received in Contemplation of Death
Similar to inheritance being not taxable, money received in contemplation of death of an individual or karta or member of a Hindu undivided family is also exempt from Income Tax. According to the Dictionary, the word contemplation means “the state of being considered or planned”.
Gift Received from Local Authority or Charitable Trust
Any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto will be exempt from income tax.
(Republished with Amendments)
Author Bio
Gift an immovable property without consideration from married sister to her brother’s daughter is taxable?
Please mention the related circular No. and date issued by the Income tax department on gift tax.
What will be the tax treatment in aggregate in the following case:
Receiving Rs. 60 Lakhs from a relative and 45,000 from non relative…??
Money received from brother’s son is taxable or not.
My husband wants to gift more than 50 k to his sister’s grand daughter. Is it exempted from income tax in hand of the recipient.
1. If a widow receives a gift from her late spouse’s mama (mother-in-laws brother) is it exempt ?
2. Is gift from late fathers mama (grand-mothers brother) exempt for the son?
What is the tax rate and who is to pay the tax. Donor or Donee ?
Respected Sir,
Where will donor show amount of gift in Income Tax Return ?
In the column stated gift exempt from tax.the category of blood relation ie son daughter,father, mother is not stated.pl incorporate the same or clarify.
regards,
chander khurana