Taxability of Gifts Received by individual or HUF

taxability of gifts by HUF or IndividualsGifts received by an individual or HUF are taxable in certain situations as prescribed by the Income Tax Act. The gift may be in the form of money or property.

It should be noted that gifts are taxable in the hands of recipient and there is no taxation in the hands of the donor.

In the following cases gifts would attract taxation:

a)      Any Movable Property is received without consideration stamp duty value of which is more than Rs. 50,000/-

b)      Movable property is received without consideration or at a lesser consideration than its fair market value, the aggregate fair market value of which more than Rs. 50,000/-

c)      Any cash gift (including gifts by checks or drafts) received in excess of Rs. 50,000/-

In the case of immovable property received single transaction is considered for calculating the threshold limit of Rs. 50,000/- while in other cases all transactions in financial year are taken into consideration for calculating ceiling of Rs. 50,000/-

Exempted Gifts

In the following cases receipts are exempted even if they are without or lesser consideration –

  • Gifts received from a relative
  • Gifts received on the occasion of Marriage of the individual
  • By way of will or inheritance
  •  In contemplation of death of the payer
  • From local Authority
  • From any fund or foundation or university or other educational institution or hospital other medical institution or any trust or institution referred to in clause (23C) of section 10; or
  • From any institution or trust registered under section 12AA.

Here relative means –

a)  Spouse

b)  Brother or sister

c)  Brother or sister of spouse

d)  Brother or sister of either of the parents

e)  Any lineal ascendant or descendent

 f)  Any lineal ascendant or descendent of the spouse

g)  Spouse of the person referred to in clause a to f

The term Property means –

i.       Immovable property being land or building or both;

ii.     Shares and securities

iii.    Jewellery

iv.    Archaeological collections

v.     Drawings; paintings; sculptures

vi.    Any work of art

vii.   Bullion

Stamp Duty Value means the value adopted or assessed or assessable any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.

Where the assessee disputes this stamp duty valuation, the procedure for resolving the dispute is the same as that in the provisions of section 50C (2) of the Income Tax Act.

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