CA Pulkit Agrawal

CA Pulkit AgrawalIntroduction:-

As per Section 56 of Income Tax Act 1961, Gift exceeding Rs. 50,000/- is taxable in the hands of Donee and is to be indicated under the head Income from Other Sources in ITRs. But if gifts received from Donors does not exceeds Rs. 50,000/- then whole of the sum received is not to be provided for tax under any head of Income. Also, Second Proviso to Section 56(2)(vii) of Income Tax Act, 1961 provides for certain conditions where any sum received as gift is not to be provided for tax under Income Tax Act, 1961 whether that exceeds Rs. 50,000/- or not.

Section 2(24)(xv) of Income Tax Act, 1961, defines Income as:

“income” includes-

(xv) any sum of money or value of property referred to in clause (vii) [or clause (viia)] of sub-section (2) of section 56;

&

Section 56(2)(vii) of Income Tax Act, 1961, provides as follows:

In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head “Income from other sources”, namely :-

(vii) where an individual or HUF receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,-

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

Provided further that this clause shall not apply to any sum of money or any property received-

(a)   from any relative; or

(b)   on the occasion of marriage of the individual; or

(c)    under a will or by way of inheritance; or

(d)   in contemplation of death of the payer or donor, as the case may be; or

(e)    from any local authority as defined in the Explanation to clause (20) of section 10; or

(f)     from ay 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 (g) from any trust or institution registered under section 12AA.

Conclusion :-

Now from the above provisions, it is clear that any sum received from relatives or on occasion of marriage, etc. is not to be included in Income from other sources and hence is not to be treated as Income, so there is no requirement to show those gifts in ITRs as it does not fall under the definition of Income chargeable to tax.

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Category : Income Tax (28055)
Type : Articles (17804)
Tags : Gift (91) ITR (632)

19 responses to “Gifts Received Not To Be Indicated in ITR”

  1. 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,

  2. 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

  3. 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.

  4. 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.

  5. SUDHIR CHANDRA THAKUR says:

    My brother helps me a cash of rs 150000 for the construction of my residential house.can i included it as a gift.

    • 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.

  6. bhavin says:

    Hello,

    My Aunt gifted me cash in Rupees greater than 50000, do I need to show it in ITR….Whats the process? Please help

    • 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.

  7. 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 ?

  8. 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

  9. 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.

  10. 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.

  11. 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.

  12. Antony says:

    Should gifts from relatives be disclosed in ITR as exempt income?

  13. Manoj says:

    Will wait for answer from Mr. Pulkit on queries raised by Mr. Bajrang Lall Bazaz.

  14. 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.

  15. 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.

  16. mohit says:

    Sir
    Whether we need to disclose the same in exempt income?

  17. motichand gupta says:

    Thanks Pulkit for wonderful knowledge sharing.

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