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Query abt taxablity of gift....urgent !!!

prerna (auditor) (95 Points)

06 April 2010

Hey all....plz help me out of this....

pls explain me sec 56(2)(vi) and 56(2)(vii)

i.e.

Gift recieved on/before 30.9.09 and

gift recieved on/after 1.10.09

n how to calculate capital gain if the gift in kind exceed rs. 50,000.

Anyone knows this pls help me yar...its so confusing...that i 4got whole CG chapter only...

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14 Replies

Deepesh Jain (C.A (May 11 Batch)) (104 Points)
Replied 06 April 2010

Any gift recived in kind is taxable after 1/10/09

Pradip (Accountant/Management) (106 Points)
Replied 06 April 2010

56(2)(vii)(b) Income from other sources. From 01-10-2009 (AY 2010-11) It is proposed that value of the immoveable property received shall be taxed only if the property is received without any consideration. It’s notable that the condition as regards inadequate consideration has been removed. Definition of property amended to restrict its application to property which is in the nature of capital asset of the assessee.

Deepak Bhardwaj (ACS, LLB & CA Finalist) (132 Points)
Replied 06 April 2010

Well as far as taxability of gift u/s 56(2)(vi) is concerned it is restricted to Rs 50,000/- in aggregate received by an Individual and HUF from other than a relative without consideration or inadequate consideration.

w.e.f 1/10/09 it has been extended to Immovable property and property other than immovable property including cash aggregate of which is again restricted to Rs 50,000/- received by an individual and HUF without consideration or inadequate consideration from a person other than a relative.

In case of cash if exceeds Rs 50,000/- it would be directly be a part of Income from Other sources.

but if it is concerned with immovable property(without adequate consideration) stamp duty would be considered as the sale consideration & cost of acquisition would be nil if is not given under any will or inheritance,on the ocassion of marriage etc where it is out of the scope of Gift.

For movable property FMC would be considered as the sale consideration if it is less than the Mkt value for inadequate consideration.

I think this brief explanation would be very helpful to get an idea of the whole picture.

deepak

1 Like

Deepak Bhardwaj (ACS, LLB & CA Finalist) (132 Points)
Replied 06 April 2010

No it is completely wrong to say that any Gift in kind is taxable. Gift received from the relatives (following relatives definition) is not at all taxable.

For example Gift received on occassion of marriage is also in kind but it is totally out of the scope of the definiton of the Gift w.e.f 1/10/09 hence not taxable. This is a recent amendments where around 7 cases given about the items out of the scope of the gift.

thank you

deepak

Kunal (Article) (84 Points)
Replied 06 April 2010

d whole bl**dy tax confuses d hell outta me....!!!

stil ur query...for CG....if v hav taxed gift under IFOS....d amt so included in IFOS shall bcum d cost of acquisitn for CG,,,not d prev owners cost !!!

Prasanth Nair V (ACA,ACS,CWA Final,Mcom) (557 Points)
Replied 06 April 2010

Hai, If the aggegate value of the taxable gifts exceeds Rs. 50,000 then the whole amount is taxable, and not the amount in excess of Rs. 50,000.

Viswanathan.C.P (Manager-Finance and Accounts) (332 Points)
Replied 06 April 2010

In case of immovable property, the stamp duty value is considered for tax purposes.

The new proposal under section 50 C would tax the difference between the stamp duty value and the consideration in the hands of the purchaser.For eg. if the stamp value basis the property value is Rs. 500000/- and the consideration paid by the purchaser is 200000/- the difference is chargeble to tax .

For Movable property, the FMV is considered as against Stamp duty value.

The exclusion includes gift on the occasion of marriage,or will or by inheritance or from specified authorities such as educational or medical institutions etc

ca dipti sharma (not yet) (259 Points)
Replied 06 April 2010

YES DEEPAK IS RIGHT.All gift received in kind is not taxable there is some exceptions some of which r given below... 1)Received on the occassion of marriage. 2)Received from relatives. -Spouse of the individual. -Brother or sister of the individual. -Brother or sister of spouse of the individual. -Brother or sister of either parents of the individual. -Any linear ascendant or descendant of the individual. -Any linear ascendant or descendant of the spouse of the individual. -Spouse of the persons referred in clauses (ii) to (iv). 3) Received by will or inheritence 4 Received on and before 1.10.2009

1 Like

Nishant (Accountant) (19 Points)
Replied 06 April 2010

Hi,

Deepak & Dipti are right.

shweta arjun bhartiya (article trainee) (21 Points)
Replied 06 April 2010

i have a query abt any lineal ascendant or descendant wich is included in the definition of relative in sec 56(2)-

my query is-does any lineal ascendant and descentant include-

only parents and children

parents,grandparents,great grandparents etc and children,grandchildren,great grandchildren etc

vaibhav (M.Com. CA ) (178 Points)
Replied 06 April 2010

hi Friends,

Regarding above discussion i would like to add some facts.....

W.e.f 1.10.2009 any gift received by an individual or HUF , in Cash or in Kind ,shall be taxable in the hands of receipent as income from other sources.

provided such gift exceeds rs.50000 and should not be received from Relative,on the ocassion of marriage ,will etc.

Gift in kind includes Movable and immovable properties.

It shall not attract CG it shall attract Income from other sources u/s 56(2) .

If property is transferred without any consideration or inadequate consideration ,both the cases will attract sec 56.

thanks

Vaibhav

I am inserting Income tax india's Section 56 (2) kindly go through..........

[(vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,

(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

(b) any immovable property,

(i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;

(ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consi-deration;

(i) without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

(ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :

Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections :

Provided further that this clause shall not apply to any sum of money or any property received

(a) from any relative; or

(b) on the occasion of the marriage of the individual; or

(d) in contemplation of death of the payer or donor, as the case may be; 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.

Explanation.For the purposes of this clause,

(a) assessable shall have the meaning assigned to it in the Explanation 2 to sub-section (2) of section 50C;

(b) fair market value of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed;

(d) property means

(i) immovable property being land or building or both;

(ii) shares and securities;

(iii) jewellery;

(iv) archaeological collections;

(v) drawings;

(vi) paintings;

(vii) sculptures; or

(viii) any work of art;

(e) relative shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;

(f) stamp duty value means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.]