Taxable or not!?

No car is not covered as gift item so (4) Nil is the answer

Thanks Dhruv, Poltu, I stand corrected on this. 

That means if I want to gift Rs 10Lakh to my friend and do not want him to pay tax on it then all I need to do is buy a car (second hand for less depreciation) for 10Lakh and gift to him which he can resell if he wants for something like 9.9Lakhs and keep the cash. 

Is my understanding correct?

I found this link which answered it as well

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/faqs/faq-questions.aspx?key=FAQs+on+Gifts+received+by+an+individual+or+HUF&k=

 

The planning may be done but I think it would not be so easy and may be more expensive than paying tax on the gift. But if cost benefit is there this exercuse may be undertaken. NB. I have not gone through the link provided

car is expressly excluded from defination of property

The property for the purpose of 56(2)(vii) means only prescribed property specified in this clause. The definition of property here is exclusive & not inclusive. Car is not included in the said definition thus is not taxable under the head "other sources".

But if the car is used for business/ profession,it is taxable under PGBP u/s 28(iv).

Thanks all for your views, the point is taken.

@ MrPoltu: In my opinion in this case using car as a tool to avoid gift tax is ridiculously easy. I will present my case:

Mr Black, Mr White, Mr Gray are three friends and all are law abiding.

Mr Black wants to give Rs 10L to Mr White. Mr White doesn't want to pay gift tax if he takes this 10L as an online transfer. (law abiding hence no cash dealing)

He uses following process:

1) Mr Black purchases Mr Gray's (third friend) Mercedez for 10L (doesn't matter even if Mercedez fair value is 20L).

2) Mr Black gift this Mercedez to Mr White.

3) Mr White sells it back to Mr Gray and takes the 10L cash from him.

End result: Mr White has the gift of 10L from Mr White. Mr Gray gets to keep his car.

 

Isn't that ridiculously easy, the Car doesn't even need to leave Mr Gray's premises at all.

I have thrown this out just to keep myself corrected on this.