Whether gifts in kind are eligible for exemption under clause (v) of sub-section (1)

ANNEX – CIRCULAR NO. 284, DATED 13-10-1980 REFERRED TO IN CLARIFICATION

1. The question as to whether gifts in kind made by any person would be eligible for exemption under section 5(1)(v ) has been considered by the Board in consultation with the Ministry of Law.

2. The Board have been advised that a gift other than a sum of money would not be eligible for such exemption in view of the Explanation 5  to section 80G of the Income-tax Act inserted by the Finance Act, 1976, with effect from April 1, 1976.

3. Explanation 5  to section 80G of the Income-tax Act provides : “For removal of doubts, it is hereby declared that no deduction shall be allowed under this section in respect of any donation unless such donation is of a sum of money.” Under section 5(1)(v) gift-tax shall not be charged in respect of gifts made “to any institution or fund established or deemed to be established for a charitable purpose to which the provision of section 80G of the Income-tax Act, 1961 apply”. Since the provisions of section 80G would be applicable only in respect of the donation or gifts which would be a sum of money as per Explanation 5  thereof, it follows that exemption, under section 5(1)(v) of the Gift-tax Act, would also be restricted to such gifts.

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