Taxability of Gifts Received & Important FAQ's


If any sum of money is received 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 sum is chargeable to tax.


Exceptions:

No tax will be charged, if the same is received by individual/HUF:​

  • 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 in section 10; or

  • From a trust or institution registered under section 12AA OR 12A.

  • From an Individual by a trust created or established solely for the benefit of relative of the Individual.

  • by the way which is not regarded as transfer accordance with section 47.

Who is relative?

​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).


Few Important FAQ's:


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

​​​Ans: Apart from marriage there is no other occasion in which gift received by an individual is not charged to tax.


2. 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: 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.​


3. 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.​


4. 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. 50,000/-


5. 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? (IMP)******


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.


6. 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. 50,000 In 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.

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