Gift received in kind!!!

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 July 2010 Suppose if a father gifts to his son in the normal course of time (i.e. not in the occasion of marriage or for starting a business) 240 grams of Gold. He has gifted in kind, in such a case whether it is taxable? If yes at what rate? the rate should be taken the rate at the date of gift - commodities Gold rate closing rate?
Thank you

Aditya Maheshwari

Aditya Maheshwari (Expert)
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01 July 2010 Gifts from close relatives is not taxable and hence the above will not be taxable as it is received from father.

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CA Sanat Pyne

CA Sanat Pyne (Expert)
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01 July 2010 U/s 56(2)(vii) Any gifts received from relatives is exempt from tax.
For the purpose of this, ‘relative’ means : ‐
(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 the either of the parents of the individual;
(e) any lineal ascendant or descendant of the individual;
(f) any lineal ascendant or descendant of the spouse of the individual;
(g) spouse of the person referred to in clause (ii) to (vi).

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Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 I don't know why Mr. Sanat is considering this query under Income from other sources.

As per Section 2(14) Gold will be considered as capital asset and it will be taxable under the head Capital Gain [Section 45(1)]. However, as per Section 47(2) it is not considered as transfer. So at this time it will not be taxable under Income Tax Act.

It will be taxable in the hands of son when he will sale the Gold

CA Sanat Pyne

CA Sanat Pyne (Expert)
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02 July 2010 Mr.Shudhanshu Agrawal,
Please read the question carefully.
Father gifted gold(kind) to son.
He is asking about this transaction not later on. applicability of capital gain tax is on the hands of transferer.
But U/s 56(2)(vii) tax will be applicable in the hands of receipient.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 As per Section 56(1) any income shall be taxable under this head when it is not taxable under any othe head mentioned u/s 14. But gold is considered under Capital Gain head as it is a capital asset u/s 2(14) and every capital asset is taxable under the head capital gain [Section 45(1)]. The reason for which it is not taxable in above case is because it has not been considered as tranfer u/s 47. If gift will be considered taxable u/s 47 then you will not be able to say it is exempted just because of Section 56(2)(vii) as Income from other source head is not applicable for this transaction.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 I dont wat is being discussed.

However Since gift is not treated as a transfer u/s 47 it will not be taxable for the father to give gift to son and the son is receiving gold without any consideration. However gift is received from father and hence the same will not be taxaxble in the hands of the son under the head income from other sources as it is not taxable u/s 56(2)

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 We are discussing that in the above case we should not refer Income form other sources as it comes when any income is not considered in any other head.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 If u receive a gift then under which head will it be taxable?

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 It will depend upon what kind of gift it is. If suppose it is gold, as in above case, then we should refer Capital gain head only.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 So if gold is received from any one by u then it will be taxable under capital gains?

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 yes, as gold is a capital asset u/s 2(14) and every capital asset shall be taxed u/s 45(1). However, u/s 47(2) gift is not conidered as transfer, it will not be taxed. This is what is my view for above.

In other words, there is no need to refer Section 56(2)

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 When u are not transferring any asset and instead receiving gold still the same will be taxable under head capital gains what u mean to say.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 Mr. Aditya i just want to know if you have to check the applicability for taxability of gold what procedure you will follow??

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 Dear Shudhanshu

W. E. f. 01.06.2010 if u receive gold as gift other than a non relative is taxable under the head income from other sources. Before that receipt of gold was not taxable.

If u sell gold then it is taxable under the head capital gains. However since the above is gift it is not considered as a transfer and hence not taxable under the head capital gains.

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Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 i got the point where i was doing mistake.....i agree with you now....thanks for the help

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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02 July 2010 Actually i was reffering Sec 45(1) first whereas i should refer Section 47 before applying Section 45(1)

Aditya Maheshwari

Aditya Maheshwari (Expert)
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02 July 2010 You are welcome. I thought i went somewhere wrong and therefore the discussion went this long.

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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