A very common and frequent question running in the mind of taxpayers is the taxability of gifts. In this part, you can gain knowledge about various provisions relating to taxability of gift received by an individual or a Hindu Undivided Family (HUF) i.e. sum of money or property received by an individual or a HUF without consideration or a case in which the property is acquired for inadequate consideration.

From the taxation point of view, gift can be classified as follows:

1. Any sum of money received without consideration, it can be termed as ‘monetary gift’.

2. Specified movable properties received without consideration, it can be termed as ‘gift of movable property’.

3. Specified movable properties received at a reduced price (i.e. for inadequate consideration), it can be termed as ‘movable property received for less than its fair market value’.

4. Immovable properties received without consideration, it can be termed as ‘gift of immovable property’.

5. Immovable properties acquired at a reduced price (i.e. for inadequate consideration), it can be termed as ‘immovable property received for less than its stamp duty value’.

It is important to note that such gifts received could have tax implications in the hands of the recipient; therefore, one needs to exercise caution so that he is not caught unawares.

Sum of money:-As per the provisions of the I-T Act, 1961 (the Act), any sum of money received by an individual or a Hindu undivided family in a particular financial year, without consideration, the aggregate value of which exceeds Rs 50,000 is taxable.

Immovable Property:Effective October 1, 2009, the scope of the taxability provisions in respect of the gifts has been enlarged to include immovable property, including land or building or both. If any immovable property is received without consideration, whose stamp duty value exceeds Rs 50,000, the stamp duty value of such property would be taxable.

If any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs 50,000, the stamp duty value of such property would be taxable.

Other gifts:-
Similar to the immovable property, certain other gifts received w.e.f October 1, 2009, has also been brought under the tax net. These include shares and securities, jewellery, archeological collections, drawings, paintings and sculptures as specified under the Act. In these cases, if the aggregate fair market value of the benefit received by way of a gift exceeds Rs 50,000, the same would be taxable.

present-gift-ribbon-bow-yellow-gold-silverExceptions to the rule :- It is pertinent to note that the tax law does provide for certain exceptions which are worth noting as these provide substantial relief to individuals/HUF under normal day-to-day circumstances. These include:

Gifts from relatives :
-Gifts received from any relative, as defined under the Act, is not taxable. Relatives include spouse of the individual; brother or sister of the individual; brother or sister of the spouse of the individual; brother or sister of either of the parents of the individual; any lineal ascendant or descendant of the individual; any lineal ascendant or descendant of the spouse of the individual; and the spouse of the person referred to as aforesaid.


Gifts received on marriage:-
Any gift received by an individual on the occasion of his/her marriage would also not be taxable. It is customary to receive gifts of money and kind on the occasion of marriage. Therefore, this is an important exception to the general rule.


Gift received under a will, etc :-
Any gift received under a will or by way of inheritance, or in contemplation of death of the payer is also not taxable.

Certain other events :-In case an individual receives any gift from any local authority as specified under the Act, the same would not be taxable. Similarly, any gift received from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust/institution, as specified under the Act, would not be taxable.

Documentary Evidence:-
Gifts received are quite prone to litigation. Hence, it is prudent to maintain documentary evidence in respect of the gifts received, to avoid any dispute with tax authorities at a later stage. This is particularly relevant in case the gift amount is substantial and also where it is received from relatives. In case of gift of money received from a relative, it is advisable to have gift deed/letter of understanding exchanged and kept in records by the recipient of the gift for future reference.

FAQs on Gifts received by an individual or HUF

Contents

Q.1 Are monetary gifts received by an individual or Hindu Undivided Family (HUF) taxable?

​Ans: If the following conditions are satisfied then any sum of money received (i.e, monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax (*):

Sum of money received without consideration.

The aggregate value of such sum of money received during the year exceeds Rs. 50,000.

(*) Refer next FAQ for situations in which sum of money received by an individual or HUF is not charged to tax, i.e., monetary gift is not charged to tax. ​

Q.2 Are there any cases in which sum of money received without consideration, i.e., monetary gift received by an individual or HUF is not charged to tax?

Ans: If any sum of money is received on or after 01/10/2009 by an Individual or HUF without any consideration and the aggregate value of which exceeds Rs. 50,000 during the previous year, then the whole of the aggregate value of such sum is chargeable to tax.

However, in the following cases nothing will be charged to tax in respect of any sum of money received by an Individual or HUF without any consideration, if the same is received:​

  • from any relative or by a HUF from its members; or
  • on the occasion of the marriage of the individual; or
  • under a will/ by way of inheritance; or
  • in contemplation of death of the payer or donor as the case may be; or
  • from a local authority as defined under Explanation to clause (20) of section 10 of the Income-tax Act, 1961; or
  • from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in  section 10 or
  • by any fund, trust, institution, any university, other educational institution, any hospital, other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or  (applicable if the property is received on or after 1st day of April, 2017)
  • from a trust or institution registered under  section 12AA​​; or
  • from a trust or institution registered under section 12A; or  (applicable if the property is received on or after 1st day of April, 2017)
  • from an Individual by a trust created or established solely for the benefit of relative of the Individual.  (applicable if the property is received on or after 1st day of April, 2017)

any sum received by the way which is not regarded as transfer accordance with section 47.

Q.3 Gift received from relatives are exempt from tax. Who will be considered as relative for the purpose of claiming such exemption?

Ans: ​Following persons would be considered as relative ​

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(c) Brother or sister of the spouse of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant or descendent of the individual;

(f) Any lineal ascendant or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).​

Q.4 Apart from marriage are there any other occasions in which monetary gift received by an individual will not be charged to tax?

​​​Ans: Gift received only on the occasion of marriage of the individual is not charged to tax. Apart from marriage there is no other occasion in which gift received by an individual is not charged to tax. Hence, gift received on occasions like birthday, anniversary, etc. will be charged to tax.​​

Q.5 Are monetary gifts received from friends liable to tax?

​Ans: Gifts received from relatives are not charged to tax.

(g) Spouse of the persons referred to in (b) to (f).

Friend is not a relative as defined in the list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).​

Q.6 Are monetary gifts received from abroad liable to tax?

Ans: ​​If the aggregate value of monetary gift received during the year by an individual or HUF exceeds Rs. 50,000 and the gifts are not covered under the exceptions prescribed in the preceding FAQ, then gifts whether received from India or abroad will be charged to tax.​​

Q.7 An Individual received different gifts (cash) from his friends, none of the gift exceeded Rs. 50,000 but the total of the gifts received during the year exceeded Rs. 50,000. What will be the tax treatment in such a case?

​Ans: Sum of money received without consideration by an individual or HUF is chargeable to tax if the aggregate value of such sum received during the year exceeds Rs. 50,000.

The important point to be noted in this regard is the “aggregate value of such sum received during the year”. The taxability of the gift is determined on the basis of the aggregate value of gift received during the year and not on the basis of individual gift. Hence, if the aggregate value of gifts received during the year exceeds Rs. 50,000, then aggregate value of such gifts received during the year will be charged to tax.​

Q.8 If the aggregate value of gift received during the year by an individual or HUF exceeds Rs. 50,000, whether total amount of gift will be charged to tax or only the amount in excess of Rs. 50,000 will be charged to tax?

Ans: Sum of money received without consideration by an individual or HUF is charged to tax if the aggregate value of such sum received during the year exceeds Rs. 50,000. Once the aggregate value of monetary gift received during the year exceeds Rs. 50,000, then the aggregate value of gift received during the year will be charged to tax.​

Q.9 Are there any cases in which the value of immovable property received by an individual or HUF without consideration (i.e. by way of gift) is not charged to tax?|Are gifts of immovable property received by an individual or HUF charged to tax?

Ans: Stamp duty of immovable property is chargeable to tax, if immovable property is received by an Individual or HUF without any consideration and the stamp duty value exceeds Rs. 50000.

However, in the following cases nothing will be charged to tax in respect of immovable property received on or after 01/10/2009 without any consideration, even if the stamp duty value exceeds Rs. 50,000:

  • from any relative or by a HUF from its members; or
  • on the occasion of the marriage of the individual; or
  • under a will/ by way of inheritance; or
  • in contemplation of death of the payer or donor as the case may be; or
  • from a local authority as defined under Explanation to clause (20) of section 10 of the Income-tax Act, 1961; or
  • from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in  section 10(23C); or
  • by any fund, trust, institution, any university, other educational institution, any hospital, other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or  (applicable if the property is received on or after 1st day of April, 2017)
  • from a trust or institution registered under  section 12AA ; or
  • from a trust or institution registered under section 12A; or  (applicable if the property is received on or after 1st day of April, 2017)
  • by way of transaction not regarded as transfer:   (applicable if the property is received on or after 1st day of April, 2017)

1. property received by way of distribution at the time of total or partial partition of HUF [sec. 47(i)]

2. property received by an Indian subsidiary company, if the parent company or its nominees hold the whole of the share capital of the subsidiary company [sec. 47(iv)]   (Inserted by Finance Act, 2018 i.e. w.e.f 01.04.2018)

3. property received by an Indian holding company, if the whole of the share capital of the subsidiary company is held by the holding company [sec. 47(v)]  (Inserted by Finance Act, 2018 i.e. w.e.f 01.04.2018)

4. property received by amalgamated company from amalgamating company in the scheme of amalgamation, if amalgamated company is an Indian company. [sec. 47(vi)]

5. property received by resulting company from demerged company in the scheme of demerger, if resulting company is an Indian company. [sec. 47(vib)]

6. property received by a banking institution from banking company in a scheme of amalgamation of a banking company with a banking institution sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949)  [sec. 47(viaa)]

7. property received by successor co-operative bank from predecessor co-operative bank in a business reorganisation.  [sec. 47(vica)]

8. from an Individual by a trust created or established solely for the benefit of relative of the Individual.  (applicable if the property is received on or after 1st day of April, 2017)

Q.10 An individual received gift of three properties from his friend. The value of none of the property exceeded Rs. 50,000, but the aggregate value of these three properties exceeded Rs. 50,000. What will be the tax treatment of gift in this case?

Ans: ​​In case of immovable property received without consideration by an individual or HUF, the limit of Rs. 50,000 is to be applied transaction-wise and all immovable properties received as gift during the year are not to be clubbed for applying the limit of Rs. 50,000. Hence, if the total stamp value of immovable properties received as gift during the year exceeds Rs. 50,000 but the stamp value of none of the property exceeds Rs. 50,000, then nothing will be charged to tax.

Q.11 Are immovable properties received as gift from friends liable to tax?

​Ans: Gifts received from relatives are not charged to tax. Relative for this purpose means:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(c) Brother or sister of the spouse of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant or descendent of the individual;

(f) Any lineal ascendant or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

Friend is not a relative as defined in the above list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).​

Q.12 Are gifts of immovable property located abroad liable to tax?

Ans: ​​If the aggregate value of monetary gift received during the year by an individual or HUF exceeds Rs. 50,000 and the gifts are not covered under the exceptions prescribed in the preceding FAQ, then gifts whether received from India or abroad will be charged to tax.​

Q.13 An Individual received gift of a flat from his friend. The stamp duty value of the flat is Rs. 84,000. In this case whether the total value of gifted property will be charged to tax or only the value in excess of Rs. 50,000 will be charged to tax?

Ans: ​​If the conditions discussed in earlier FAQ (regarding the taxability of gift of immovable property) are satisfied, then the entire value of immovable property received without consideration, i.e., received as gift will be charged to tax. Once the taxability is attracted, i.e., value of property received as gift exceeds Rs. 50,000 then the entire value of the property is chargeable to tax. Hence, in this case entire value of property, i.e., Rs. 84,000 will be charged to tax.​

Q.14 Would any taxability arise if an immovable property is received for less than its stamp duty value?

Ans: If an Individual or HUF receives (on or after 1st day of October, 2009 but before April 1, 2017) and any person receives (After April 1, 2017), in any previous year from any person or persons any immovable property(being land or building or both):

  • without consideration, the stamp duty value of which exceeds Rs. 50,000 then the stamp duty value shall be chargeable to tax.
  • for a consideration, if stamp duty value exceeds the amount of consideration and the difference between stamp duty value and consideration is more than Rs. 50,000, then such difference is chargeable to tax. (applicable from A.Y 2014-15 to A.Y 2018-19).
  • for a consideration, if stamp duty value exceeds 105% of the amount of consideration and the difference between stamp duty value and consideration is more than Rs. 50,000, then such difference is chargeable to tax. (applicable from A.Y 2019-20)Provided that where the date of an agreement and date of registration are not same, Stamp Duty will be considered as applicable on the date of agreement. This will be applicable only when the amount of consideration is received by account-payee cheque or bank draft or online transfer before the date of agreement.Provided that if the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall apply in relation to stamp duty value of such property as they apply for valuation of a capital asset under those sections.

Q.15 Are gifts of movable property received by an individual or HUF charged to tax?

​​Ans: If the following conditions are satisfied then value prescribed for movable property (*) received by an individual or HUF will be charged to tax​:

  • Prescribed movable property is received without consideration (i.e., received as gift).
  • The aggregate fair market value of such property received by the taxpayer during the year exceeds Rs. 50,000In above case, the fair market value of the prescribed movable property will be treated as income of the receiver.

(*) Prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.

Considering the above definition, nothing will be charged to tax in respect of gift of any item being a movable property other than covered in the above definition, e.g., Nothing will be charged to tax in respect of a television set  received as gift, because  a television  set  is not covered in the definition of prescribed movable property.

($) Refer next FAQ for situations in which prescribed movable property received without consideration by an individual or HUF, i.e., received as gift is not charged to tax.​

Q.16 Are there any cases in which the value of prescribed movable property received without consideration, i.e., received as gift by an individual or HUF is not charged to tax?

​​​​​Ans: If the conditions given in preceding FAQ are satisfied, then value of prescribed movable property received without consideration, i.e., received as gift by an individual or HUF is charged to tax. However, in the following cases nothing will be charged to tax in respect of prescribed movable property received without consideration:

  • Property received from relatives.
  • Property received by a HUF from its members.
  • Property received on the occasion of the marriage of the individual.
  • Property received under will/ by way of inheritance.
  • Property received in contemplation of death of the donor.
  • Property received from a local authority as defined under section 10(20​) of the Income-tax Act).
  • Property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C).
  • Property received from a trust or institution registered under section 12AA​.
  • Any shares received by an individual or HUF, as a consequence of business re-organisation of co-operative bank or demerger or amalgamation of a company [as referred to in clause (vicb) or clause (vid) or clause (vii) of Section 47]

Q.17 An individual received gift of jewellery from his friends. The total value of jewellery received during the year as gift from all the friends amounted to Rs. 84,000. What will be the tax treatment of gift in this case?

Ans: ​If the aggregate fair market value of prescribed movable property received by an individual or HUF without consideration during the year exceeds Rs. 50,000, then the total value of such properties received during the year without consideration will be charged to tax. In this case the total value of jewellery received during the year exceeds Rs. 50,000 and hence, Rs. 84,000 will be charged to tax.​

Q.18 Does any taxability arise if prescribed movable property is received by an individual or HUF for less than its fair market value?

​Ans: If the following conditions are satisfied then prescribed movable property (*) received by an individual or HUF will be charged to tax ($):

  • Prescribed movable property is acquired by an individual or HUF.
  • The aggregate fair market value of such properties acquired by the taxpayer during the year exceeds the consideration of these properties by more than Rs. 50,000. In other words, the aggregate fair market value of all such properties is higher than the consideration and the difference is more than Rs. 50,000.

(*) Prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.

Considering the above definition, nothing will be charged to tax if any movable property (other than those covered in the above definition) is received for less than its fair market value e.g., Nothing will be charged to tax in respect of a television set received for less than its fair market value because a television set is not covered in the definition of prescribed movable property.

($) Refer next FAQ for situations in which prescribed movable property received for less than its fair market value is not charged to tax.​

Q.19 Are there any cases in which prescribed movable property received for less than its fair market value by an individual or HUF is not charged to tax?

​​​​Ans: If the conditions given in preceding FAQ are satisfied, then prescribed movable property received (i.e. acquired) by an individual or HUF for less than its fair market value is chargeable to tax. However, in the following cases nothing will be charged to tax in respect of prescribed movable property received for less​ than its fair market value:

  • Property received from relatives (*).
  • Property received by a HUF from its members.
  • Property received on the occasion of the marriage of the individual.
  • Property received under will/ by way of inheritance.
  • Property received in contemplation of death of the donor.
  • Property received from a local authority as defined under section 10(20) of the Income-tax Act.
  • Property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C).
  • Property received from a trust or institution registered under section 12AA​.(*) Relative for this purpose means:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(c) Brother or sister of the spouse of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant or descendent of the individual;

(f) Any lineal ascendant or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).​

 ( Republished with Amendments)

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Tags : FAQs (518) Gift (93) gift from relatives (40) gift in kind (37) section 56 (126) Tax on Gift (50)

54 responses to “Taxability of Gift received by an individual or HUF with FAQs”

  1. NATWARLAL says:

    QUERY ON GIFT OF SHARES IN PHYSICAL FORM TO SPECIFIED RELATIVES
    CASE SITUATION 1
    Sir I B.R.Patel femal have received gift of 100(one Hundred) colgate palmolive share. (at that time rs.450/- per share ) from my grnad father in phisical from by paying stamp duty on transfer of shares 0n 19th march 1993.deed of transfer under Gift letter .
    But it is registered in my name in April1993. two bonus received so that 400 share now.
    Now i have to sale the same 100 original plus 300 bonus share offline because it is not in demate form.and not possible to do demate .
    what will be tax effect to me in 2018.
    Again if buyers from mefor said shares convert the said share in Demate and then sales the said share after 1 years in demate form what will be tax implication to the buyer.

    CASE SITUATION 2
    IN ABOVE CASE IF I Gift to my sister entire 100 original plus 300 bonus share offline to my sisterin june 2018 in Physical form what will be tax effect to me in 2018 .
    if my sister convert the same in demate and then sale entire 400 shares by stock exchange by paying STT in sept 2018 what will bve tax imlication to by sister .

    Thanks sir
    B.R.Patel
    phone no 9426802887
    meghraj market ,2nd floor, Gandhi chowk
    junagadh-362001
    tilaranj@yahoo.com

  2. Mahesh says:

    I want to gift my biological brother some money who has been adopted by my grand fathers brother. Will it be taxable at his hand.

  3. Kaushal Kumar says:

    22 decimals property bought in 1991 for a total price of 1.32 lakhs-
    The total cost of the property as per circle rate is 1 crore.
    Property is in the name of my mother who wants to gift it in 2018 to Kaushal Kumar (HUF) which comprises of me, my wife and my daughter as co-parceners.
    I want to sell the property received as gift immediately (i.e. in 2018 itself) after the property is transferred in the name of Kaushal Kumar (HUF).
    What would be the tax liability.

  4. Raj says:

    Hello sir,

    My father (87) wants to gift his flat to me & my brother ( both unmarried) .

    (1) what’s the process of gifting a house in coop society?
    What’s r tax implication?

    Is it better to be nominnee than to get gift?

    (2l does the will needs to be registered?

    Pl guide

    Regards

  5. Rahul jain says:

    Sir I want to know about the if I being an huf family and purchasing goods which are not related to my business activities and those goods are given my huf to the member of huf.. So while purchasing these goods if I have pay GST means huf pays GST can huf take the benefit of GST

  6. SATHISH KUMAR says:

    Sir,
    I had gifted my father a cheque for Rs.25.00 lakh. He started an FD with the amount, making me as 2nd joint holder with my signature. But, the interest goes to his personal SB account monthly. Will it attract any tax liability to me. ?.

  7. Suresh says:

    Im filing my 2014-15,2015-16 IT returns now.My father in law gifted me 450000 cash on occasion of my marriage in august 2014 by taking loan from LIC.He had all the records regarding this loan.But I do not have any documentary evidence on receiving those amount as it is gifted in cash mode.I kept that amount for one year in home.After one year(in August 2015)I put that amount in bank FD.

    With out having documentary evidence,is it possible to claim as gifted income in 2014-15 IT returns?

    If it is not possible,may i show this amount in 2015-16 IT returns as gifted income as i have bank FD records?
    please clarify.

  8. Rajendra Vijayvargia says:

    An HUF can take the Cash Gift from his members or not.

  9. Nikita says:

    Hi,

    In case if we donate / gift an immovable property to a charitable / religious trust whether it will exempt or deduction is available. If not, what will be the tax consequences ?

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