Receiving Gift indeed brings a cheerful smile on the face of the receiver, but if receiver gets to know that he has to pay tax thereon, the smiling face may turn sad.

Although Gift Tax Act has been abolished, however there are certain provisions in the Income Tax Act, which make the gift taxable in the hands of the recipient.

Today we are sharing with you certain circumstances as to how gift will be taxable as per section 56(2)(X).

Income Tax on Gift

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)

XPERT CONSULTING – Tax Consultants |  E: contact@xpertconsulting.biz

Republished with Amendments

More Under Income Tax

16 Comments

  1. SOBHANA says:

    A INDIVIDUAL GIFTING NON RELATIVE UNLISTED SHARES MARKET VALUSE 6 LAKHS(FV 50000 ONLY)WHAT WILL BE THE TAX LIABILITY.
    2.THIS DEALINGS FOR COMPENSATING OLD SHARE DEALINGS AND EXECUTING AGREEMENT .WHAT WILL BE TH ETAX IMPLICATION.

  2. Vipul Shah says:

    Hi,
    My son received a gift of car from car manufacturer.
    As per exemption mentioned in last paragraph of exemption 4, it is mentioned that on car there is no gift tax levied.
    Under which section, gazette, circular of income tax/gift tax it is claimed to be as waiver.

  3. Online says:

    Hi,I have a question…If I invest 1.5 lacs in senior citizen savings scheme in my parent’s name,can she claim tax benefit of 80c for that??Suppose her total income from other sources are 3 lacs per annum.Please explain.

  4. Online says:

    Hi,I have a question…If I invest 1.5 lacs in senior citizen savings scheme in my parent’s name,can she claim tax benefit of 80c for that??

  5. Sudeep Kumar says:

    I have received 5 Lakh as Gift from my uncle’s will. Whether it will be taxable?
    Further more if I transfer this amount in my other own account, whether the amount or transaction is taxable.

    1. Sabyasachi Mukherjee Mukherjee says:

      Any sum received by way of will or inheritance or will is exempted from tax.

      It is not considered as taxable in the hands of revipient.

  6. sunil nigam says:

    If brothers of a married girl (Non I Tax Payee) Gift an amount of say five lacs or more in a Financial year, what are the implications & steps to be taken at either end.Pertaining to FY 2014-15 OR 2015-16.

  7. Ashish says:

    Dear sir

    If a married doughter received some lakhs (cash/ cheque) from her father. Is it falls under gift tax or income tax.

  8. alok says:

    Mr. A (Father in law ) gifted a Household property to his daughter in law (B) in 30.6.2006. Stamp duty value at that time is Rs. 400000/- B paid the stamp duty on Rs. 400000/- and gift deed was registered in her name.

    Now in 30.6.2014 She(B) sold the property for Rs. 65 Lacs and on 30.9.2014 she (B) purchased a new house for Rs. 80 lacs.

    Let me know the tax position

  9. rashmi acharya says:

    what will be the implication if gift is received outside India by cheque and said cheque is sent by some friend to assesse in India???????????

  10. Avardhana says:

    u/s 50C the seller has to pay capital gains tax on the stamp value of the property sold even if he has not recd the amount(no inflow) and u/s 57 the income of the purchaser gets added such value, difference between the declared value and stamp duty value, even if he has not paid that amount(no outflow). This is applicable to only individuals and not to firm, co etc.

  11. N L N SWAMY says:

    sir,
    if a person gifts to brother in different times in a year and confirms the fact before the assessing officer , who denied and entire gift added in the hands of assessee donee , which now disputed in appeal before the cit (A) is pending. Is there any relevant decisions of high cout .pl advise how to tackle the issue before the appellate authority
    N.L.NSWAMY
    ADVOCATE&TAX CONSULTANT
    9291552595

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