Taxability of Gifts
Taxability of gift received by various persons in accordance with provisions of Section 56(2)(x).
The taxability of gifts received by any person –
Cash Gifts, or Gifts of Movable Property, or Gifts of immovable property [Section 56(2)(x)]: Where any person receives, in any previous year, from any person or persons on or after 01-04-2017 —
Case | Amount Taxable |
(a) Cash gifts: Any sum of money, without consideration, the aggregate value of which exceeds ₹ 50,000, | the whole of the aggregate value of such sum. |
(b) An immovable property without consideration or for inadequate consideration : Any immovable property – | |
(i) without consideration, the stamp duty value of which exceeds ₹50,000 | the stamp duty value of such property. |
(ii) for a consideration, the stamp duty value of such property as s exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely: — (a) the amount of ₹50,000; and (b) the amount equal to 5% of the consideration. [Amended by Finance Act, 2018 w.e.f. 1-4-2019 i.e. AY 2019-20] [Analysis: Thus, the taxability will arise when stamp duty value exceeds 105% of the consideration or TI 50,000, whichever is more.] (c) Movable property without consideration or for inadequate consideration: Any property, other than immovable property – (i) without consideration, the aggregate fair market value of which exceeds 50,000, (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding 50,000, | the stamp duty value of such property - Such consideration. the whole of the aggregate fair market value of such property. the aggregate fair market value of such property - Such consideration. |
Exceptions:
This clause shall not apply to any sum of money or any property received-.
(i) from any relative; or
(ii) on the occasion of the marriage of the individual; or
(iii) under a will or by way of inheritance; or
(iv) in contemplation of death of the payer or donor; or
(v) from any local authority as defined in Explanation to Section 10(20) ; or
(vi) 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 section 10(23C); or
(vii) from any trust or institution registered under section 12A or Section 12AA; or
(viii) by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in Section 10(23C)(iv)/ (v)/ (vi)/ (via); or
(ix) by way of transaction not regarded as transfer under section 47(i)/(iv)/(v)/(vi)/(viaa)/(vib)/ (vic)/ (vita)/ (vicb)/(vid)/ (vii); or (Amended by Finance Act, 2018 w.e.f. 01-04-2018 i.e. AY 2019-201
(x) from an individual by a trust created or established solely for the benefit of the relative of the individual.
Meaning of Relative: "Relative" means, —
(a) In case of an individual –
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the persons referred to in items (ii) to (vi); and
(b) In case of a Hindu undivided family - any member thereof.
Notes :
(A) Sum of money includes not only cash but also cheque, drafts, fixed deposit receipts or a NSC since it represents a sum of money though not in cash.
(B) The sum of money is taxable if aggregate value of gifts received by assessee from any person or persons exceeds 50,000. E.g.: If A receives 31,000 from B and 20,000 from C, then, since aggregate value of gifts received by A exceeds 50,000, thus whole of 51,000 is taxable.
Ques-
Taxability of the gifts:
Check the taxability of the following gifts received by Mrs. Rashmi during the previous year and compute the taxable income from gifts :
(i) On the occasion of her marriage on 14-8-2019, she has received 90,000 as gift out of which 70,000 are from relatives and balance from friends.
(ii) On 12-9-2019, she has received gift of ₹18,000 from cousin of her mother.
(iii) A cell phone of ₹ 21,000 is gifted by her employer on 15-08-2019.
(iv) She gets gift of 25,000 from elder brother of her husband's grandfather on 25-09-2019.
(v) She has received gift from her friend of 2,000 on 14-04-2019.
Ans: The answer is as follows –
(i) Not taxable since the same has been received by her on the occasion of marriage.
(ii) Taxable since her mother's cousin does not fall in the category of relative.
(iii) Gift from employer shall be chargeable to tax under the head 'Salaries' as the same exceeds ₹5,000.
(iv) Taxable since brother of grandfather does not fall in the category of relative.
(v) Taxable.
Therefore, the total taxable sum under income from other sources under section 56 = 18,000 + 25,000 + 2,000 = 45,000. Since the aggregate value of taxable gifts doesn't exceed 50,000, therefore, the same are not 'income' as per section 56(2)(x). Hence, none of the gifts shall be taxable in the hands of Mrs. Rashmi.
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