taxtion of gift
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 January 2010
I want the list of person to whom i gifted a property immovable or movable (in both cases ) is not taxble & why (reason )
also
the list of person from whom i receive gift is not taxable (i,e not considered as my income ).& reasons for this (why it is not taxable
also
the list of person from whom i receive gift is not taxable (i,e not considered as my income ).& reasons for this (why it is not taxable
11 January 2010
pl find below
1. New Provisions for Tax Treatment on Gifts from 1-10-2009
When a gift or a specified property is received without consideration from a non-relative whether in cash or in kind or any property is purchased for an inadequate consideration it shall be treated as income from other sources and taxable in the hand of the recipient under the new provisions for gift. In this article we will discuss about the new provisions regarding gift tax treatment w.e.f. 1-10-2009. You can also differentiate with old provisions after reading below articles on gift tax treatment.
Relative Means
1. Spouse of the individual
2. Brother or sister
3. Brother or sister of the spouse
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendants or descendant of the individual
6. And lineal ascendant or descendant of the spouse
7. Spouse of the person referred to in (2) to (6)
Amount of Gift
Where an amount Rs.50000 (Gift in case or by cheque or draft) in aggregate in any previous year is received by an individual or HUF without any consideration the aggregate sum shall be deemed to be the income of the recipient.
Immovable property without any consideration
If any immovable property without any consideration is received and the stamp duty value of which exceeds Rs. 50,000, stamp duty value will be chargeable to tax.
Immovable property for a consideration which is less than the stamp duty value
If any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs.50,000, then the difference between stamp duty value and consideration is chargeable to tax.
Example: Mr. X purchase plot for Rs. 10 lakh from his friend (Stamp Duty Value: 10.50 lakh) on Oct, 20, 2009. Mr X purchase another property for Rs. 15 lakh from his friend (Stamp duty Value : 15.50 lakh on Nov 15, 2009.
Solution: No tax is levied in the hands of Mr. X. Whether the difference is Rs. 1 lakh, but we will not consider it as whole/aggregate. “
Important Note: Single transaction would be applicable for the ceiling limit of Rs.50,000 opposite in the case of movable property where we consider aggregate amountâ€
Movable property without consideration
If aggregate fair market value of movable properties received without consideration during a previous year exceeds RS. 50,000, the whole of aggregate fair market value of movable property will be chargeable to tax.
Movable property for a consideration which is less than fair market value
If movable property is received for a consideration which is less than the aggregate fair market value of the property by an amount exceeding Rs. 50,000, then the difference between aggregate fair market value and the consideration is chargeable to tax.
Example: Mr X purchased gold for Rs. 1 lakh from his friend (fair market value was Rs. 1.60 lakh) on Oct 15, 2009. He purchased another item painting for Rs. 4 lakh from his friend which fair market value was Rs. 4.70 lakh on Nov 5, 2009.
Solution: Mr x has paid aggregate consideration Rs. 5 lakh, aggregate fair market value was 6.30 lakh. So the difference is taxable in the hand of Mr X i.e (Rs. 1.30 Lakh)â€
Important note: Recipient can take the benefit of “tax paid†by increasing the cost of property (cost of acquisition u/s 49) , while computing the capital gain tax on sale of that gifted property.
Important Note: Please consider word aggregate means in all transaction
Exempted Situations
In the following situation, the gift will be not taxable and treated as exempted.
• Property or Money received on the occasion of the marriage of the individual.
• Property or Money by way of will/inheritance.
• Property of Money in contemplation of death of the payer.
• Property of Money received from a local authority.
• Property of Money received from any fund, foundation, university, other educational institution, hospital, medial institution, any trust or institution referred to in section 10(23C).
• Property or Money from a charitable institute registered under section 12AA.
List of properties
• Immovable property being land or building
• Shares and Securities
• Jewellery
• Arc Collection
• Drawings
• Paintings
• Sculptures
• Any work or art
Resident or Non-Resident Situations
• All provision are applicable same for resident or non-resident donor
• Non-Resident in India is also chargeable to tax if receive gifts in India.
• Recipient status does not matter whether resident or non-resident, above provision will be applicable.
2. Receive a Gift From Relatives? No tax
you can receive any amount from your relatives without paying any income tax as there is no gift-tax at present. There are certain provisions and important points which we will discuss in this post. Gift can be received by the following ways.
FromRelatives
Relative means:
1. Spouse
2. Brother or sister
3. Brother or sister of the spouse
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendent(A lineal descendant is a person who is in direct line to an ancestor, such as child, grandchild, great-grandchild and on. Similarly, a lineal ascendant is parent, grandparent, great-grandparent and so on.)
6. Any lineal ascendant or descendent of the spouse
7. Spouse of the person referred to in (2) to (6)
Some tests when receiving gift from relatives
Thus, a gift received by an individual from his spouse, or from his brother or sister, or from the spouse’s brother or sister, parents, or from any lineal ascendant or descendant of oneself or one’s spouse would normally be fully tax-exempt. Similarly, any gifts of any amount whatsoever received from the spouses of any of these persons would also be completely exempt from income tax.
For example, if Mr. X receives a gift of Rs. 3,00,000 in cash from his brother-in-law, that is, his spouse’s brother, it would be exempt since the brother or sister of the spouse comes within clause (3) of the aforesaid explanation.
Hence, whenever you receive any gifts from relatives you must carefully apply the test to ascertain whether the person concerned falls within one of the seven categories as above referred.
FromNon-Relatives
If a person who makes a gift does not fall within any of the above categories, then he would be considered as a non-relative and gifts from such people would be exempt only up to the extent of Rs. 50,000 aggregate in a financial year.
Note:
It may be noted that since a Hindu Undivided Family can’t have relatives, any gifts received by it in excess of Rs. 50,000 in a year would be liable to full income tax.
2) Tax-Exempt Gifts from Other Persons
Besides gifts received from a relative or on the occasion of an individual’s marriage, the following are the other gifts which are completely exempt from tax as provided in the proviso to Section 56(2)(vi) of the I.T. Act:
1. Gift received under a Will or by way of inheritance;
2. Gift in contemplation of death of the donor;
3. Gift from any local authority;
4. Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C); and
5. Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.
Thus, scholarships, stipends or charities received from a charitable institution would be completely exempt from income tax in the hands of the recipients without any limit provided the trust or institution giving the charity is registered under Section 12AA. Likewise, all gifts under a Will, and all amounts received on the death of a person as a part of the inheritance are fully exempt from income tax.
Some Important Point While Receiving Gifts
1. Always take gift by cheque or draft .
2.Get a gift deed mentioning the relationship.Its always better to mention PAN number of the Donor in the gift deed.
3. Gift From Close Relative Not Taxable
I Wish to give a gift/loan of Rs. 2 Lakh to my mother who is in India. If I transfer this amount from my NRE A/c to her saving account in India – Will she be taxed ?
A. Gift amounts received from any close relative are not taxable in the hand of either the donor or the donee. it is perfectly okay to give the gift as intended by you to your mother, both of you will not be taxed on this transaction. As far as the law is concerned, you may give the same as a loan also if you desire. note that the income generated in future from this gifted amount is eligible of tax, unless your mother’s total income, including income from the gifted corpus, is less than Rs. 2.25 lakh (if she is senior citizen) for the financial year.
1. New Provisions for Tax Treatment on Gifts from 1-10-2009
When a gift or a specified property is received without consideration from a non-relative whether in cash or in kind or any property is purchased for an inadequate consideration it shall be treated as income from other sources and taxable in the hand of the recipient under the new provisions for gift. In this article we will discuss about the new provisions regarding gift tax treatment w.e.f. 1-10-2009. You can also differentiate with old provisions after reading below articles on gift tax treatment.
Relative Means
1. Spouse of the individual
2. Brother or sister
3. Brother or sister of the spouse
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendants or descendant of the individual
6. And lineal ascendant or descendant of the spouse
7. Spouse of the person referred to in (2) to (6)
Amount of Gift
Where an amount Rs.50000 (Gift in case or by cheque or draft) in aggregate in any previous year is received by an individual or HUF without any consideration the aggregate sum shall be deemed to be the income of the recipient.
Immovable property without any consideration
If any immovable property without any consideration is received and the stamp duty value of which exceeds Rs. 50,000, stamp duty value will be chargeable to tax.
Immovable property for a consideration which is less than the stamp duty value
If any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs.50,000, then the difference between stamp duty value and consideration is chargeable to tax.
Example: Mr. X purchase plot for Rs. 10 lakh from his friend (Stamp Duty Value: 10.50 lakh) on Oct, 20, 2009. Mr X purchase another property for Rs. 15 lakh from his friend (Stamp duty Value : 15.50 lakh on Nov 15, 2009.
Solution: No tax is levied in the hands of Mr. X. Whether the difference is Rs. 1 lakh, but we will not consider it as whole/aggregate. “
Important Note: Single transaction would be applicable for the ceiling limit of Rs.50,000 opposite in the case of movable property where we consider aggregate amountâ€
Movable property without consideration
If aggregate fair market value of movable properties received without consideration during a previous year exceeds RS. 50,000, the whole of aggregate fair market value of movable property will be chargeable to tax.
Movable property for a consideration which is less than fair market value
If movable property is received for a consideration which is less than the aggregate fair market value of the property by an amount exceeding Rs. 50,000, then the difference between aggregate fair market value and the consideration is chargeable to tax.
Example: Mr X purchased gold for Rs. 1 lakh from his friend (fair market value was Rs. 1.60 lakh) on Oct 15, 2009. He purchased another item painting for Rs. 4 lakh from his friend which fair market value was Rs. 4.70 lakh on Nov 5, 2009.
Solution: Mr x has paid aggregate consideration Rs. 5 lakh, aggregate fair market value was 6.30 lakh. So the difference is taxable in the hand of Mr X i.e (Rs. 1.30 Lakh)â€
Important note: Recipient can take the benefit of “tax paid†by increasing the cost of property (cost of acquisition u/s 49) , while computing the capital gain tax on sale of that gifted property.
Important Note: Please consider word aggregate means in all transaction
Exempted Situations
In the following situation, the gift will be not taxable and treated as exempted.
• Property or Money received on the occasion of the marriage of the individual.
• Property or Money by way of will/inheritance.
• Property of Money in contemplation of death of the payer.
• Property of Money received from a local authority.
• Property of Money received from any fund, foundation, university, other educational institution, hospital, medial institution, any trust or institution referred to in section 10(23C).
• Property or Money from a charitable institute registered under section 12AA.
List of properties
• Immovable property being land or building
• Shares and Securities
• Jewellery
• Arc Collection
• Drawings
• Paintings
• Sculptures
• Any work or art
Resident or Non-Resident Situations
• All provision are applicable same for resident or non-resident donor
• Non-Resident in India is also chargeable to tax if receive gifts in India.
• Recipient status does not matter whether resident or non-resident, above provision will be applicable.
2. Receive a Gift From Relatives? No tax
you can receive any amount from your relatives without paying any income tax as there is no gift-tax at present. There are certain provisions and important points which we will discuss in this post. Gift can be received by the following ways.
FromRelatives
Relative means:
1. Spouse
2. Brother or sister
3. Brother or sister of the spouse
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendent(A lineal descendant is a person who is in direct line to an ancestor, such as child, grandchild, great-grandchild and on. Similarly, a lineal ascendant is parent, grandparent, great-grandparent and so on.)
6. Any lineal ascendant or descendent of the spouse
7. Spouse of the person referred to in (2) to (6)
Some tests when receiving gift from relatives
Thus, a gift received by an individual from his spouse, or from his brother or sister, or from the spouse’s brother or sister, parents, or from any lineal ascendant or descendant of oneself or one’s spouse would normally be fully tax-exempt. Similarly, any gifts of any amount whatsoever received from the spouses of any of these persons would also be completely exempt from income tax.
For example, if Mr. X receives a gift of Rs. 3,00,000 in cash from his brother-in-law, that is, his spouse’s brother, it would be exempt since the brother or sister of the spouse comes within clause (3) of the aforesaid explanation.
Hence, whenever you receive any gifts from relatives you must carefully apply the test to ascertain whether the person concerned falls within one of the seven categories as above referred.
FromNon-Relatives
If a person who makes a gift does not fall within any of the above categories, then he would be considered as a non-relative and gifts from such people would be exempt only up to the extent of Rs. 50,000 aggregate in a financial year.
Note:
It may be noted that since a Hindu Undivided Family can’t have relatives, any gifts received by it in excess of Rs. 50,000 in a year would be liable to full income tax.
2) Tax-Exempt Gifts from Other Persons
Besides gifts received from a relative or on the occasion of an individual’s marriage, the following are the other gifts which are completely exempt from tax as provided in the proviso to Section 56(2)(vi) of the I.T. Act:
1. Gift received under a Will or by way of inheritance;
2. Gift in contemplation of death of the donor;
3. Gift from any local authority;
4. Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C); and
5. Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.
Thus, scholarships, stipends or charities received from a charitable institution would be completely exempt from income tax in the hands of the recipients without any limit provided the trust or institution giving the charity is registered under Section 12AA. Likewise, all gifts under a Will, and all amounts received on the death of a person as a part of the inheritance are fully exempt from income tax.
Some Important Point While Receiving Gifts
1. Always take gift by cheque or draft .
2.Get a gift deed mentioning the relationship.Its always better to mention PAN number of the Donor in the gift deed.
3. Gift From Close Relative Not Taxable
I Wish to give a gift/loan of Rs. 2 Lakh to my mother who is in India. If I transfer this amount from my NRE A/c to her saving account in India – Will she be taxed ?
A. Gift amounts received from any close relative are not taxable in the hand of either the donor or the donee. it is perfectly okay to give the gift as intended by you to your mother, both of you will not be taxed on this transaction. As far as the law is concerned, you may give the same as a loan also if you desire. note that the income generated in future from this gifted amount is eligible of tax, unless your mother’s total income, including income from the gifted corpus, is less than Rs. 2.25 lakh (if she is senior citizen) for the financial year.
Querist : Anonymous
Querist :
Anonymous
(Querist)
12 January 2010
thank you sir
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