Under the existing provisions, in a nutshell, gifts received by individuals and HUFs, only as sum of money from non relatives in excess of Rs.50000/- per annum are taxable. Gifts on the occasion of marriage or under a will are also outside the tax net. Gifts in kind are also not taxable.
Now the gifts in kinds are being made taxable in the hands of recipients. Cases of deemed gifts due to inadequate considerations are also being brought in the tax net.
In case an immovable property being land or building or both is received without consideration, the stamp duty valuation of such property would be deemed gift in the hands of recipient provided the difference between stamp valuation exceeds Rs. 50000/-.
If an immovable property being land or building or both is received for a consideration but the stated consideration is less than the stamp duty value of the property, and if the difference between the stated consideration and the stamp duty valuation exceeds fifty thousand rupees, then such difference would be considered as inadequate consideration and such inadequate consideration would be income in the hands of the recipient.
However, pertinent to mention that it is open to the assessee to dispute the stamp duty valuation as unfair. In case the assessee disputes stamp valuation then the existing provisions as contained in section 50C(2) would apply and the assessing officer would have to appoint a departmental valuation officer.
However, pertinent to mention that it is open to the assessee to dispute the stamp duty valuation as unfair. In case the assessee disputes stamp valuation then the existing provisions as contained in section 50C(2) would apply and the assessing officer would have to appoint a departmental valuation officer.
However, pertinent to mention that it is open to the assessee to dispute the stamp duty valuation as unfair.
In a case where movable property is received without consideration and the aggregate fair market value of such property exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property shall be taxed as the income of the recipient. Where received with consideration, but fair market value exceeds such consideration by Rs.50,000/- then excess would be taxable as gifts. Only movable properties namely the (i) shares and securities; (ii) jewellery; (iii) archaeological collections; (iv) drawings; (v) paintings; (vi) sculptures; or (vii) any work of art would be taxable under these new provisions. Other movable properties would not be taxable.
Method of fair valuation of a movable property would be prescribed.
The manner in which the provisions have been drafted indicate that for each item of immovable property received the limit of Rs.50000/- would apply separately. Whereas for the movable properties received without consideration, the aggregate of all such movable properties would be considered as one category and for movable property received with inadequate consideration, the aggregate of all such movable properties would be considered as a separate category. The cash limit of Rs.50000/- would be considered separately per annum.
However, the position will continue that all gifts whether in cash or in kind will not be taxable if received :
(a) from any relative; or
(b) on the occasion of the 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; or
(f) 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
(g) from any trust or institution registered under section 12AA.
