Regarding Gift Tax


This query is : Resolved 

26 November 2009 What will be the Tax benifit to the gift payer, If he gives gift to his relatives or other persons ?

Sunil (Expert)
26 November 2009 No benefit other than transfer of income. However, if the gift is done to minor child, spouse or son's wife, there is no benefit at all as the income is still clubbed in donor's hand.

26 November 2009 Please note that it's merely diversion of income & not application of income. Therefore question of benefit to Gift payer doesn't arises in Income tax act.
Further i support Sunil regarding Clubbing provisions.

26 November 2009 agree

26 November 2009 GOOD REPLAY SUNIL

27 November 2009 Thanks, But I want to know that suppose a salaried person get salary of Rs.200000 p.a. and has no any other income and now if he gift out of this Rs.45000 or 60000 to his relative/other person then is there any relief/deduction that he can adjust from his tax liability ?

27 November 2009 Hi deepak, the answer is no. As the entry for gift will be passed trhough capital account, it will reduce assessee's capital n will increase capital of donee. but if there is no blood relation then keep the amount upto Rs. 50,000 otherwise the whole amount will be taxable in the hands of donee u/s 56. for relatives there is no such limit. Suppose if IT Department will give exemption for the same then every year i will gift my income to my spouse n he will also do the same and there will be no question of any income tax with happy ending. no????Regards,
CA Shakuntala Chhangani


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