Taxability on Gift of Capital asset by a Company



Quick Summary
Gifting a capital asset from a company is generally considered a taxable transfer, unlike gifts made by individuals or Hindu Undivided Families (HUFs). While Section 47(iii) of the Income Tax Act previously exempted gifts from individuals and HUFs, recent amendments effective from AY 2025-26 clarify that this exemption does not extend to companies. This distinction is crucial for understanding capital gains tax liabilities on corporate gifts.

1. Sec.47 on transfers not regarded as transfers states as follows: (iii) any transfer of a capital asset by an individual or a Hindu undivided family, under a gift or will or an irrevocable trust; 2. The aforesaid clause (iii) of Section 47 of the Income Tax Act specifically states that any gift
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I am a practising Chartered Account with 19+ years of experience in Direct Tax and Accounts.

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