This 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 or For Inadequate Consideration and all those gifts which are fully exempt under Income Tax under Section 56(2)(X)
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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.
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) |
Points need to be remember :-
1) Gift received from relative is exempt.
2) Gift received on the occasion other than marriage from non specified person shall be taxable under the head income from other sources.
3) Money received whether in cash or cheque in excess of Rs. 50,000/- from non specified persons shall be taxable.
4) Gift received in contemplation of death is not taxable.
5) There is no tax implication if HUF receives gift from any member of the HUF or purchase assets at lower price than stamp duty value/ Fair market value.
6) As per Hindu law HUF can not make gift to any one . Such gift is void ab initio.
( Author is a CA Student and can be reached at E-Mail-: [email protected])
Click Here to Read Other Articles of Lakesh Kumar
(Republished with Amendments by Team Taxguru.)
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in revelopment project of chs lts if the developer allots free of cost additional area then is is u/s 56(2)(x) or not kindly let men know
“56(2)(x) is applicable only when gifts are received by Individual and HUF.”…Section 56(2)(x) is applicable on all persons not only Individual and HUF.
lol.. How can a firm , company, LLP, AJP have mother, father spouse as relative :DD ??
Is gift taxed on donor.
eg: I own shares of an unlisted company. I want to gift all of it to the other shareholder since company does nothing since many years. Will i be taxed. if FMV is about 20 lakhs
I am forming HUF with myself as Karta. Can my wife gift initial money 7 Lacs to HUF ? If HUF invests 1.5 Lacs in ELSS then what is tax implications on HUF?
Thanks in advance.
Sam
A person purchase a office less then circle rate in a mall and the difference of the same is rs. about 9 lacs what will be tax impact and where it will be show in ITR 3.
2- is there is any relaxation / deduction clause.
very informative
is gift of urban land given to father s younger brother taxable in the hands of donee(father s brother)
Dear sirs
I beg to know the tax implication arise when Shares of a Listed Company (acquired by Mr. ‘A’ through its IPO at a cost of Rs.10,000/-) after 5 years he transfers the same as gift to his own (sibling) married sister ‘Y’ (market price whereof became Rs.90,000/-), whether Mr. A have to pay Income Tax for this transfer by way of gift, or Y gets gift?
If I purchase shares of a private limited company at a price less than fire market value of the share than can difference is taxable in my hand.
Shagan on occasion of marriage amount received by the parent in cash by parent and same is deposit in their own account is taxable in hand of the parent or not.
Hi,
I am a real estate consultant & got stuck in a deal.The property is a flat in Pune,The ready reckoner rate is 90 lakhs. The agreement value is 83 lakhs & stamp duty will be paid by the seller.So basically the ready reckoner rate is more than agreement value by 7 lacs. Please help me with following query:
1-What will be tax liability for the buyer if we do register at 83 lakhs.Here seller is ready to pay stamp duty on ready reckoner.
Hi, my father in law wants to gift a cheque of Rs 12 lakhs to my wife ( his daughter who is now married to me) falls under taxable income of my wife or not.
I am a salaried person. I along with my two friends (both salaried) purchased a Car and given the same to Car rental company. Company will give us profit share of the car every month on my account.
Will the received amount is taxable ?? Also can I share the TAX along with my two friends as all three has invested in the car.
my querry is, whether gift received by discretionary family trust from the relatives of beneficiary is taxable u/s 56(2)
Dear Lakesh,
congratulation of writing such a nice such a informative and educative article.
pl reply my quiry:-
my wife received RS.375000.as basic compansation amount by UOI in MARCH 2017 as LR of her father land acquired by UOI.
another amount of RS.1500000.00 as interest amount on above compansation amount.
TOTAL amount Rs. 1875000.00
TDS deducted Rs. 150000.00 on interest amount.My wife is housewife and has no any income.She invested Rs.150000.00 in PPF account.
I request you please know me about the Income tax liability as well as refund amount.
I will be very thankful to you for the informations.
Kindly give your advice regarding gift given by father to his son in their HUF
..suppose father X wants to g
I’ve give some amount from his individual capital to his sons HUF can father give.
Our lands were acquired by the Mujrai dept of Govt of Karnataka, apart from aquisition proceeds, received Interest on the aquisition amount. What will be the issue regarding the interest part of the proceeds ??
Hello,
I live with my mother, unmarried sister along with my wife and a child in a flat that is 20 years old. The flat is in my mother’s name. She will give me my share of 25 lakhs Rupees after it is sold via cheque/dd. As per your answers above, I understand that it would not attract any tax to me. My queries are:
1. Is that amount which I will receive will be non taxable to me ONLY AFTER she pays her own taxes first? Because, she plans to buy another flat sooner or later in the future.
2. Would she have to pay capital gains if she buys the property within 2 years?
3. Is it necessary to notarize the gift deed for legal and tax purpose?
4. I am an individual and not a HUF. Will I still be eligible for tax exempt?
Thank you very much in advance. Your help will be appreciated.
1. Gift Of a Motorcar Worth Rs. 25 Lack Recd From non Specified Person On the Occasian Of My Marriage. Exempted U/s 56 (2) ?
2. On Birth Date ?
Reply Will Be Appericiate
It will be of great value if a list of RELATIVES who are considered as Lineal ascendants / descendants is also published here
without buttons we can not wear shirts and pants here is like that without case laws we cannot establish strong opinions before tax authorities please provide as far as possible.
Sir,
Provided further that Sec-56(2)(Vii) does not apply to any sum of money or any property received-
I. From any relatives
In the meaning of Relatives clause iv- Brother or sister of either of the parents of the individual, does that mean if an individual receives a gift in the form of cash from his father’s sister, than it will be exempt from tax?
Very Good Article Lakesh. Its very Helpful. Thanx for writing such articles. Please keep on writing articles. One day you will definitely shine bright. All the best for the future.
HI,
I appreciate the clarity inyour expressions.
As regards gift by HUF to the Members, there are some Judicial Decissions holding that HUF is nothing but a group of relatives and a gift by HUF is a gift by a relative.
Bless you and welcome to Profession soon