TAXATION OF GIFTS
GIFT
'Gift' is a
transfer of a particular movable/immovable property from one person to another
without consideration/adequate consideration.
TAXABILITY
Where an individual
or an HUF receives an amount exceeding Rs.50,000/-, without consideration, from
any person/s (after 01.10.2009), the whole of such amount shall be taxable in
the hands of receiver/donee.
Where an individual
or an HUF receives any immovable property, the stamp duty value (SDV) of which
exceeds Rs.50,000/-, without consideration, from any person/s (after
01.10.2009), the SDV of such property shall be taxable in the hands of such
individual/HUF.
Where an individual
or an HUF receives any property* without consideration (other than immovable
property), the fair market value (FMV) of which exceeds Rs.50,000/-, the whole
of such FMV shall be taxable in the hands of such individual/HUF.
Where an individual
or an HUF receives any property from any person/s, for a consideration which is
less than the FMV by an amount exceeding Rs.50,000/-, the following amount
shall be taxable in the hands of the receiver:
Amount
Taxable = FMV - Consideration paid by the receiver of property.
*Property includes:
i) immovable
property (land, building or both);
ii) shares and
securities (including debentures and bonds);
iii) jewellery;
iv) archaeological
collections;
v) drawings;
vi) paintings;
vii) sculptures;
viii) any work of
art; or
viii) bullion.
EXEMPTIONS
NOTHING SHALL BE
TAXABLE if the money/property is 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 (say, a Gram Panchayat), as defined u/s 10(20); or
(vi) from any
approved fund, foundation, university, educational institution, hospital,
medical institution, trust, or institution; or
(vii) from any
trust or institution registered with the Income Tax Department (u/s 12AA).
IMP: Any amount of
money or value of property received from above - mentioned persons is NOT
TAXABLE.
** WHO IS A
"RELATIVE"?
In case of
Individuals
(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; (father, mother, grandfather,
grandmother, son, grandson, daughter, granddaughter)
(vi) any lineal
ascendant or descendant of the spouse of the individual;
(vii) spouse of the
persons referred to above.
In case of HUFs
(i) any member of
the HUF (amended by Finance Act, 2012 retrospectively from 01.10.2009)
HOW TO/WHEN TO
DOCUMENT GIFT TRANSACTIONS?
There
is an indistinctness with respect to compliance of the gift deed at times,
i.e., whether a gift deed is required to be made in every circumstance?
However, the following general inference can be made in this regard.
Gift
made by way of cash or cheque does not mandatorily require to be executed
through a gift deed. Writing a plain typed note on a paper will generally
suffice. It is not required to be stamped and registered. One may simply
mention the names of persons (donor & donee) , their relation and that
the gift is being given out of love and affection.
Gift
made by way of movable property is required to be made in stamp paper and
stamped by the notary or court, and registration of gift deed is not required
in this case. For the purpose of making a gift of immovable property, the
transfer must be effected by a registered instrument signed by or on behalf of
the donor. Gift of immovable property which is not registered is not valid as
per law and cannot pass any title to the receiver.
PS:
While receiving/giving gifts, the provisions of "clubbing of income"
should also be kept in mind.
- CA ANKIT CHANDRAKAR
- CA ANKIT CHANDRAKAR