Treatment of Gift
This query is : Resolved
07 February 2011
If employer gives gift more than Rs. 50000 to his employee on the occasion of marriage Whether it should be treated as perquisite u/s 17(2)(viii) or Gift u/s 56(2)...?
07 February 2011
It is a perquisite.
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07 February 2011
the value of any gift or token in lieu of which such gift may be recived by the employee /by the member of his house hold on ceremonial occassions or otherwise shall be taxable
gifts upto Rs.5000/- in aggregate per annum would be exempt, beyond which it would be taxable -- circular No. 15/2001, dated 12, 2001.
covered under head salary
gifts upto Rs.5000/- in aggregate per annum would be exempt, beyond which it would be taxable -- circular No. 15/2001, dated 12, 2001.
covered under head salary
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Guest
Guest
(Expert)
07 February 2011
Agree with Mr. Paul.
08 February 2011
As per Mr. Jean Paul :
"the value of any gift or token in lieu of which such gift may be recived by the employee /by the member of his house hold on ceremonial occassions or otherwise shall be taxable
gifts upto Rs. 5000/- in aggregate per annum would be exempt, beyond which it would be taxable -- circular No. 15/2001, dated 12, 2001.
covered under head salary"
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In my opinion; it is not a perquisite. Perquisite is defined in section 17(2) clearly.
Please refer the section carefully. It seeks to 'VALUE' the facility.
In the instant case there is no need of valuation. It is already given in money terms.
.
The concept of perquisite is to give certain facilities to all the employees during the course of employment and/or due to the employment terms and conditions.
.
There is no Thumb Rule for an employer to give gifts compulsorily a particular amount to each employee or class of employees at the time of their marriage.
.
What about those who are already married or who left the organisation before their marriage ?
.
One can argue that the amount is payalbe to those employees only who get ill in case of medical reimbursement.
The principle of reimbursement can't be applied as nothing remain in the hands of employee.
.
In the instant case the gift of money is due to the marriage of the employee and such amount is never written in the terms of employment.
.
This gift is also not during the course of employment. The employee does not serve at all during his marriage.
( Humour : He is preparing for honeymoon and takes further leaves and thereby disturbs the working of his employer ).
.
Gifts received at the time of marriage is clearly excluded to be charged in the head INCOME FROM OTHER SOURCES.
The concept is :
Marriage can't be a source of income !
.
( Humour : There could be a luxury of more marriages and thereby more marriage gifts every 2-3 years like Elizabeth Taylor.
Elizabeth Taylor was chosen for Osho Missfit Award for a particular comment on marriage - she told Marriage Institute is now insolvent - although she got married for 8 times till 1998).
Further :
Marriage : Marry-age : Khush Hone Ki Umar
( Jaroori Nahi ki Marriage k Baad Aadmi Khush Rahe Hi - Hum to sirf Umar ki baat kar rahe hai).
"the value of any gift or token in lieu of which such gift may be recived by the employee /by the member of his house hold on ceremonial occassions or otherwise shall be taxable
gifts upto Rs. 5000/- in aggregate per annum would be exempt, beyond which it would be taxable -- circular No. 15/2001, dated 12, 2001.
covered under head salary"
------------------------------------------
In my opinion; it is not a perquisite. Perquisite is defined in section 17(2) clearly.
Please refer the section carefully. It seeks to 'VALUE' the facility.
In the instant case there is no need of valuation. It is already given in money terms.
.
The concept of perquisite is to give certain facilities to all the employees during the course of employment and/or due to the employment terms and conditions.
.
There is no Thumb Rule for an employer to give gifts compulsorily a particular amount to each employee or class of employees at the time of their marriage.
.
What about those who are already married or who left the organisation before their marriage ?
.
One can argue that the amount is payalbe to those employees only who get ill in case of medical reimbursement.
The principle of reimbursement can't be applied as nothing remain in the hands of employee.
.
In the instant case the gift of money is due to the marriage of the employee and such amount is never written in the terms of employment.
.
This gift is also not during the course of employment. The employee does not serve at all during his marriage.
( Humour : He is preparing for honeymoon and takes further leaves and thereby disturbs the working of his employer ).
.
Gifts received at the time of marriage is clearly excluded to be charged in the head INCOME FROM OTHER SOURCES.
The concept is :
Marriage can't be a source of income !
.
( Humour : There could be a luxury of more marriages and thereby more marriage gifts every 2-3 years like Elizabeth Taylor.
Elizabeth Taylor was chosen for Osho Missfit Award for a particular comment on marriage - she told Marriage Institute is now insolvent - although she got married for 8 times till 1998).
Further :
Marriage : Marry-age : Khush Hone Ki Umar
( Jaroori Nahi ki Marriage k Baad Aadmi Khush Rahe Hi - Hum to sirf Umar ki baat kar rahe hai).
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Guest
Guest
(Expert)
08 February 2011
Yes, one may claim as exempted marriage gift u/s 56(2)((v)(b)but it will be difficult to digest by department but nothing wrong in contesting. In any case, it is not prequisit.
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08 February 2011
In my opinion; there is no condition of exemption for Marriage Gifts as per the section.
.
Hence these gifts are out of purview to consider it as a part of salary.
.
When the matter is not clear and there is ambiguity in the two sections or both sections are controversial; it always goes in the favour of the assessee.
.
Since ONLY MARRIAGE GIFTS ARE EXEMPTED in the above section hence we can conclude that these are exempt.
.
Agree with Shri Moondhra that matter may go to the court if the Assessing Officer takes another view.
( When we say that a particular circumstance is in "favour of the assessee"; it means the matter is/has remained controversial and/or has reached to the court which has been decided later on ).
.
For proper liaisoning at the department; I have already cited the concept and humour.
.
Hence these gifts are out of purview to consider it as a part of salary.
.
When the matter is not clear and there is ambiguity in the two sections or both sections are controversial; it always goes in the favour of the assessee.
.
Since ONLY MARRIAGE GIFTS ARE EXEMPTED in the above section hence we can conclude that these are exempt.
.
Agree with Shri Moondhra that matter may go to the court if the Assessing Officer takes another view.
( When we say that a particular circumstance is in "favour of the assessee"; it means the matter is/has remained controversial and/or has reached to the court which has been decided later on ).
.
For proper liaisoning at the department; I have already cited the concept and humour.
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Guest
Guest
(Expert)
09 February 2011
Agree with Mr. Rakhecha
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09 February 2011
Thanks to all Honorable Experts. In A narrow sense, Just for examination purpose I think I should follow Sir Jeen Paul,s answer.
And Now I know Why, Getting the Marks in Exams is easier than Getting the Clients in Practice...!
Thank you everybody.
And Now I know Why, Getting the Marks in Exams is easier than Getting the Clients in Practice...!
Thank you everybody.
12 February 2011
It is enough for the students if they can explain well about the provisions of the Income-Tax Act.
.
The explanations can be given according to sections itself if these can be well analyzed.
.
Only on the matters and circumstances which are not clearly covered under the Act and/or controversial; students have to focus on Case Laws.
.
Students are not required to go into the depth of circulars as provisions itself are too lengthy to understand properly. Even if they can go; excellent marks can be achieved.
.
The explanations can be given according to sections itself if these can be well analyzed.
.
Only on the matters and circumstances which are not clearly covered under the Act and/or controversial; students have to focus on Case Laws.
.
Students are not required to go into the depth of circulars as provisions itself are too lengthy to understand properly. Even if they can go; excellent marks can be achieved.
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