CA Pulkit Agrawal

CA Pulkit AgrawalGift is that thing which brings joy on anyone’s face. But at the same time it brings confusion in the mind of taxpayers as well since many people got confused as to which gift is taxable and which is exempt u/s 56(2)(X). Hence today I come up with this solution to your confusion. I will explain here, Income Tax Treatment of Immovable Property Received as Gift Without Consideration or for Inadequate Consideration, Any property other than immovable property received Without consideration or For Inadequate Consideration and all those gifts which are fully exempt under Income Tax under Section 56(2)(X).

Income Tax Perspective of Gifts

56(2)(x): Gifts received by Individual & HUF

56(2)(x) is applicable only when gifts are received by Individual and HUF. Donor or Donee may be Resident or non Resident.

1. Cash:

If aggregate value is less than Rs.50000 than nothing will be taxable. If value exceeds Rs. 50,000, the whole amount will be taxable.

2. Movable Property as Gift:

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.

3. Immovable Property 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.

4. Some Exempt gifts

If any gifts are received in following situations or from below mentioned people then those gifts will be fully exempt under Income Tax.

Any sum of money or any property received:

  • from any relative; or
  • on the occasion of the marriage of the individual; or
  • under a will or by way of inheritance; or
  • in contemplation of death of the payer or donor or
  • from any local authority or
  • from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or
  • from or by any trust or institution registered under section 12A or section 12AA; or
  • by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution or
  • by way of transaction not regarded as transfer under clause (i) or clause (iv) or clause (v) or clause (vi) or clause (via) or clause (viaa) or clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid) or clause (vii) of section 47; or
  • from an individual by a trust created or established solely for the benefit of relative of the individual.
  • 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

Note: In the above-mentioned points the term Relatives means

– Spouse of Individual

– Brother & Sister of Individual

– Brother & Sister of Spouse of Individual

– Brother & Sister of either of the parents of Individual

– Any Lineal ascendants or descendants of the individual

-Any Lineal ascendants or descendants of the spouse of the individual.

Below is a comprehensive list of Donors as per definition of relative under I.Tax Act ( Hindi connotation has also been mentioned)

List of Male Donors  List of Female Donors
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 (Chacha or Tau) Father’s Brother’s Wife (Chachi or Tai)
Father’s Sister’s Husband(Fufa) Father’s Sister (Bua)
Grand Father (Dada, Pardada) Grand Mother (Dadi, Pardadi)
Daughter’s Husband (Jawai) Son’s Wife (Bahu or Putra Vadhu)
Spouse Father (Sasur) Spouse Mother (Sas)
Spouse Grand Father (Dada Sasur) Spouse Grand Mother (DadiSas)
Brother’s Wife (Bhabhi) Mother’s Brother’s Wife (Mami)
Husband’s Brother’s Wife (Devrani or Jithani)

Some Suggested Posts related to above

S. No. Link
1 How to use / Enable E-filing Vault on Income Tax
2 Understanding Compliance Query of Income Tax Department
3 Rule 12 of Income Tax Rules wef 1st April 2016
4 Income Tax e-Filing DSC management utility
5 How to File Income Tax Return of a Deceased Assessee?
6 FAQs on filing the return of income
7 For whom e-filing of Income Tax Return (ITR) is Mandatory
8 Guide to know ITR applicable: Which ITR Applicable to whom?
9 How to reset password when activation link not confirmed while registering PAN in Income Tax Department
(Republished with Amendments by Team Taxguru)

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20 Comments

  1. Sudhan says:

    Sir,
    I Received 1 lakh from my husband and it was invested in STP and also invested 5k from my account as SIP in november 2018.
    I am not working but should i file Income tax for it .

  2. Surya says:

    Dear Sir,

    I gifted rs 200000 to my father in 2017-18. He has no source of income. The interest gained during the year is nearly 6000.
    Please tell
    1. which itr form he has to filled?
    2. is it necessary to fill itr?
    3. where to show gift and interest as income?
    4. tax implication for me?

    Thanks & Regards,

  3. Deepak Bansal says:

    Dear Pulkit,

    Thanks for the detailed article on gifts. I have gone through the article and your responses to the queries. Can understand the gift received by relatives is neither exempted income nor taxable income. It is simply gift so should not be declared. So If a person received cheques from different relatives worth 15-20 Lakhs, how this will be reported to IT department. Obviously gift deeds will be created but they will not be shared with IT dept.

    Thanks
    Deepak Bansal

  4. JYOTIRMOY ADHYA says:

    If immovable property ( market value Rs40.00 lacs )is gifted by A to his maternal uncle B ( brother of A,s mother ) , then whether uncle B has to pay gift tax ? If so , what amount would be added to his ” income from other sources”. Pl assume that stamp duty is 7% ie Rs2.80 lacs . Specufically I want to know , what amount would be taxable ( ie Rs40.00 lacs or Rs2.80 lacs ) ? Pl reply.

  5. Mihik Agrawal says:

    I am a student. I have purchased a apartment. The source of fund is gifts from my parents and maternal aunt. There is some income now from the rent received from the apartment. How do i file my IT return. How do i reflect this apartment in my ITR and any tax over it.

    1. Aman Garg says:

      Yes, As per defination of relative defined under income tax act, 1961 under section 56(2)(vii) brother is covered under it. Hence any sum of money given by brother to assesse is covered under exemption of section 56(2)(vii). Hence not taxable and need not to shown while filling ITR by donee.

    1. Aman Garg says:

      Yes, We should shown such amount as gift given by aunt in ITR provided such gift is given on other than the occasion of individual marriage. Such gift is shown under the head imncome form other sources of donee and hance taxable.

  6. Yogesh Kataria says:

    Mr. Pulkit
    is there any requirement to maintain records of gift received in cash on occasion of marriage i.e. name of donor, PAN no. and amount gifted. ?

    is there any requirement regarding disclosure of gift received in cash on occasion of marriage in ITR ?

  7. vikas says:

    My mother gifted me cash of rs.175000 on dated 9th november 2016 as 500 rupee has been banned and I deposited it in bank on dated 10 november 2016 without any deeds.i am government employee and tax payee
    Should I show it in my itr..is there any requirement of deeds?
    Can it be prepared on simple paper?
    If I prepare it on notary on the coming date greater than 10 november..is this notary will be valid?
    Waiting for ur valuable suggestion
    Thanx

  8. Pulkit Agrawal says:

    Dear Antony, to your query I would like to answer that, the gifts received from relatives are not included in the definition of Income as per Income Tax Act, 1961.

    Since, the gifts received from relatives a not incomes, so there is no question to consider such gifts to be exempt or taxable income. So, there is no requirement to show these gifts in ITRs

    Further, it is recommended to execute a gift deed for gifts received from relatives and get it notarized by a notary, in order to avoid any future complications.

  9. Pulkit Agrawal says:

    Dear Antony, to your query I would like to answer that the gift received from relatives are not included in the definition of Income under Income Tax Act 1961, so there is question of such gifts to be said as exempt income as these gifts are not considered as income under Income Tax Act.

    Further, I would like to recommend that a Gift Deed should be executed for gifts received for relatives and that should be notarized by a notary to avoid all future complications, that may arise.

  10. Pulkit Agrawal says:

    Dear Bajarang Lall Bazaz Ji,
    The query raised by you must be appreciated.

    On your queries, I would like to answer as follows:

    1. Yes, the cash received by the childrens can be deposited in a joint bank account opened in the name of Child and Guardian.

    2. For your query regarding, limit for accepting such gifts and tax liablity, I would like to draw your attention to the Provisions of Section 64(1A), where it is stated that any income accure/arises to the minor child shall be included in the income of his parent and since the minor child is not the assessee himself under the Income Tax Act, there shall not be given any separate limit of Rs. 50,000/- to each such minor child. But as per the provisions of Section 10(32), an exemption of Rs. 1,500/- can be availed for each minor child by the parent assessee in whose total income such gifts received by the minor child is clubbed.

    3. Gifts received in kind is also to be valued, as the value of such gifts are to be clubbed in the Total Income of the parent assessee.

    4. Gifts received by all the 4 minor childs are to be clubbed in the Total Income of Parent Assessee and the same should be shown in ITR of Parent Assessee and Rs. 1,500/- exemption can be claimed by the Parent Assessee for each minor child.

    In a nutshell, it can be stated that Rs. 50,000/- limit for anonymous gifts received is given per assessee and minor childs can not be said to be the assessee as their incomes are to be clubbed in the Total Income of Parent Asseessee. But an exemption of Rs. 1,500/- can be claimed by parent assessee for each minor child.

  11. Bajarang Lall Bazaz says:

    Sir, My son has 4 children. On each child birthday, a small get-together is arranged where our family!s friend circle make gift in kind including small ornaments and also in cash. Expenses of the function is by us and the receipt is of child. My questions are ?
    1. Can the cash received be deposited in bank account opened in the joint name of the child and guardian ?
    2. Is there any limit for accepting such gift ? What is the tax liability ?
    3.If gift received in kind is to be valued for any purpose ?
    4. Any disclosure required in the return of the father of the child ?
    Please guide and oblige.

  12. Pulkit Agrawal says:

    Dear mohit, as gift received upto Rs. 50,000/- or on occassion of maariage or from relatives, etc. are not included in the definition of income, so there is no question that gift is exempt income or taxable income. So there is no requirement to show these exempt gifts in ITR as these exempt gifts can not be said to be exempt income.

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