Gift Taxability Under Section 56 2(VII)


GIFT

In India for an individual and HUF Gift is a very common in Income tax term but to avoid the tax evader Government has made some provision related to this concept but subject to the below provision you can make tax planning accordingly

Explanation to the Provision 56 2 (VII)

  • If any Individual of HUF received any money >50,000 without any consideration complete amount would be taxable in hand of receiver under other sources income.
  • If any Individual of HUF received any immovable property >50,000 without any consideration or less than the stamp duty value of property which is >50,000 excess to the received amount will be taxable in hand of receiver under other sources income.

For e.g.

A received property of (stamp duty value) 15,00,000 received as a gift then 15,00,000 will be taxable in hand of A

A received property of (stamp duty value) 15,00,000 received at 10,00,000 then 5,00,000 will be taxable in hand of A

If any Individual of HUF received any other then immovable property >50,000 without any consideration or less than the Fair market Value of property >50,000 excess to the received amount will be taxable in hand of receiver under other sources income.

For e.g.

A received property of (FMV) 1,50,000 received as a gift then 1,50,000 will be taxable in hand of A

A received property of (FMV) 1,50,000 received at 95,000 then 55,000 will be taxable in hand of A

A received property of (FMV) 1,50,000 received at 1,20,000 then Nothing will be taxable in hand of A because difference between FMV & received amount is less than 50,000

Exceptional are:

(a) from any relative; or
(b) on the occasion of the marriage of the individual; or
(c) under a will or by way of inheritance; or
(d) in contemplation of death of the payer; or
(e) from any local authority as defined in the Explanation to clause (20) of section 10; or
(f) from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or
(g) from any trust or institution registered under section 12AA.

Relative mean:

(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;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in clauses (ii) to (vi);

The author can also be reached at casahilthakral7@gmail.com

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CA Sahil Thakral 
on 07 December 2017
Published in Income Tax
Views : 9155
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