Tax on Gift Received (Cash or Non-Cash) in Indian u/s 56

Under Section 56(2)(vii) Gifts Received Shall be Taxed as “Income from Other Sources”

Where an Individual of a HUF (Hindu Undivided Family) receives, in any previous year, from any person or persons on or after the 1st day of October, 2009-

A)  any sum of money, without consideration, the AGGREGATE value of which exceeds Rs. 50,000, the whole of the aggregate value of such sum;

B)  any immovable property, without consideration, stamp duty value of which exceeds Rs. 50,000, the stamp duty value of such property;

C)  any property, other than immovable property;

1. Without consideration, the AGGREGATE fair market value (FMV) of which exceeds Rs. 50,000, the whole of the aggregate fair market value of such property;
2. for a consideration which is less than the AGGREGATE fair market value of the property by an amount exceeding Rs. 50,000, the aggregate fair market value of such property as exceeds such consideration;

Exempted Gifts

• From a Relative
• On the Occasion of the Marriage of the Individual (including gifts received by daughter-in-law from parents-in-law; but excluding gifts received by son-in-law from parents-in-law)
• Under a Will or by the way of Inheritance
• In Contemplation of Death of the payer of donor
• from any Local Authority as defined by Clause (20) of Section 10
• from any fund or foundation or university or other educational institution or hospital or other institution or any trust referred in section 10(23C)
• from any trust of institution registered under section 12AA
• NRIs gifting parents in India from their NRE account

Gifts to Minor:

Gifts received by minors will be brought within the purview of taxes by means of clubbing of income, in case of both parents having taxable income, it will be clubbed with the parent who is earning the highest.

Recommended Read: Clubbing of Income of Minor

Realty Gifts also comes in Purview

Real estate deals done for values lower than the rates fixed by state governments / local bodies will also be taxed. Here, the tax will be levied on the difference of amount between state government’s rate and purchase price. The tax needs to be paid by the buyer of the property.

Important Terms:

A) Relative means

1. Spouse of the Individual
2. Brother or Sister of the Individual
3. Brother or Sister of the Spouse of the Individual
4. Brother or Sister of either of their Parents of the Individual
5. Any lineal ascendant or descendant of the Individual
6. Any lineal ascendant or descendant of the Spouse of the Individual
7. Spouse of person mentioned to in clause 2 to 6 above.

B) Property means

1. Immovable property being land or building or both
2. Shares and Securities
3. Jewellery
4. Archaeological Collections
5. Drawings
6. Paintings
7. Sculptures
8. Any work of Art
9. Bullion (w.e.f. 01-06-2010)

C) Jewellery Includes

1. Ornaments made of gold, silver, platinum or any other precious metal
2. Precious of semi precious stones and jems.

D Stamp Duty Value means

• The value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of Stamp Duty in respect of 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 Income Tax Act.