Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Gift from employer in excess of rs. 5000

Dattaprasad (Audit Officer) (184 Points)

04 April 2012

Dear Friends,

pls let me know the procedure if the gift received from the employer is exceeds by Rs. 5000. whether the full amount is taxable or the balance inexcess of Rs. 5000 is taxable in the hands of Employee.

Reply
Follow
Share

9 Replies

Sonam Bidasaria (CA) (770 Points)
Replied 04 April 2012

Balance in excess of Rs. 5,000 will be perquisite.

Upgrade to CAclubindia Pro. Subscribe Now!

Rekha (CA FINAL) (79 Points)
Replied 04 April 2012

As per section, gift received from employer is not taxable if it is not exceeds Rs 5000/-...Any amount which is received beyond Rs.5000 is fully taxable..(i.e) whole amount is taxable

1 Like

Sonam Bidasaria (CA) (770 Points)
Replied 04 April 2012

Originally posted by : Rekha
	As per section, gift received from employer is not taxable if it is not exceeds Rs 5000/-...Any amount which is received beyond Rs.5000 is fully taxable..(i.e) whole amount is taxable

I agree. It was my mistake. As per the Rule 3(7)(iv), if the value of any gift, voucher or token is below Rs. 5,000 in the aggregateduring the previous year, the value of perquisite shall be taken as NIL.

vipul jain (EFFORTS NEVER FAIL) (2894 Points)
Replied 04 April 2012

hello my friend....u raise a very good ques,,,whether full amount is taxable or in excess of 5000 is taxable.....

same query is asked by ICAI in PCC-MAY2011 exam....Q.3(5th point).....

PROVISION==>> The Value of any Gift or voucher or tokan in lieu of Gift Received by the employee or by member of his household not exceeding Rs. 5000 in aggregate during the previous year is exempt...

ICAI solved PCC MAy 2011 Q.3 with 2 Assumptions.

1st Assumption== If the value of amout exceed 5000...entire amount is taxable as perquisite.

2nd Assumption== the sum in excess of Rs. 5000 is taxable in view of the language of Circular No. 15/2001 dated 12-12-2001....

It is interesting to note that Circular No. 15/2001, dated 12-12-2001 was on "tax deduction at source on salaries for the F.Y.2001-02"...

The recent Circular on dis subject is that Circular No. 8/2010 dated 13-12-2010 doesn't use any such language ...thus, the circular No. 15/2001 was applicable only for the F.Y.2001-02 and the subsequent circular on the same subject have not used any such language...

THUS, IN VIEW OF THE CLEAR LANGUAGE OF THE LAW,, GIFT OF VALUE RS. 5000 OR MORE ARE FULLY TAXABLE..

I m also attached the sollution of MAY 2011 pcc tax exam....

Regards

Vipul Jain

(Efforts Never Fail)

Attached File : 446388 959922 pcc may 2011 tax.pdf downloaded: 479 times

1 Like

sanchit (none) (39 Points)
Replied 05 April 2012

mr. vipul jain you quoted the right circular 15/2001 which talks about this matter and declares that only amount in excess of 5000 will be taxable

however still this circular no. is being quoted in taxmann's STUDENT GUIDE TO INCOME TAX by mr. VK SINGHANIA and only amount in excess of 5000 is being made taxable in that book

i think the reason that a writer of the repute of mr. singhania is still making use of this circular in his book is that THERE HASNT BEEN ANY SUBSEQUENT CIRCULAR WHICH CAUSES CIRCULAR NO. 15/2001 TO STAND WITHDRAWN.....so i guess that still that circular no. 15/2001 is applicable because there hasnt been any other circular that contradicts it as such or renders it inapplicable

still i am not fully sure about this as my argument is solely based on what i read in Taxmanns book.

I Would love to get your arguments in favour of or against what i reported here......so do reply sir.....!!!!

thnks