From October 1, taxpayers will have to pay a tax for accepting any gift worth Rs 50,000 or above. This means any gift-in-kind, the value of which exceeds Rs 50,000, will become taxable in the hands of the person who gets it. So far, only gifts in cash of the same value were taxable.
Certain categories of gifts, however, will be exempt. Gifts from a relative on the occasion of a marriage, under a will or by way of inheritance, in contemplation of the death of the donor, from any local authority or fund or trust will not be subjected to tax. A relative will include a spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendant and spouse of any of the relatives. “Any such person who receives a gift of any such property on or after October 1, 2009 must pay the income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years,” the finance ministry said in a statement on Wednesday. For example, for a Rs 4,00,000 car received from a friend, the receiver would have to pay up to Rs 1,20,000, if his or her income falls in the highest tax bracket of 30 per cent. The gift, which could include immovable property or any other property, will be taxed as income from other sources under clause (vii) of sub-section 2 of section 56 of the Income Tax Act.
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