Say goodbye to the NEW NORMAL?
Checkout our new video on YouTube
Hiral Vakil
2019-03-07 14:28:47Gift as per Income tax act means property (both movable and immovable) and money (cash, cheque, draft, etc) received without consideration or against inadequate consideration. Let’s understand what movable and immovable property include on which income tax provisions apply:
Under the following situations, gifts received are non-taxable in hands of recipient irrespective of monetary value:
Relative*
Here is the summary of all the scenarios for better understanding:
| Gift | Consideration | Amount taxable |
|---|---|---|
| Money (cash, cheque, draft) | Nil | If money > 50,000; whole amount taxable |
| Immovable property | Nil | If Stamp duty value > 50,000; Stamp duty value would be taxable |
| Immovable property (as defined above) | Received which is less than stamp duty value by an amount exceeding Rs 50,000 | [Stamp duty value – consideration] would be taxable |
| Agricultural land in rural area | Nil/received | Nil |
| Movable property (as defined above) | Nil | Fair market value > 50,000; Fair market value would be taxable |
| Movable property (as defined above) | Received which is less than Fair market value by an amount exceeding Rs 50,000 | Fair market value – consideration > 50,000 Fair market value would be taxable |
| Property/money on the occasion of marriage | Nil/received | Completely exempt irrespective of value |
| Any gifts not included in definition above | Nil/received | Completely exempt irrespective of value |
Gifts received from relatives are not charged to tax.
Friend is not a relative as defined in the list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).
Gift of money: Aggregate value of cash gifts received without consideration during a financial year would be taxable as Income from Other Sources in the hands of the recipient. However, if the aggregate value of such gifts is less than Rs 50,000, then it would be exempt from tax
Was not able to understand the 2nd point under “When are gifts taxable” regarding Nisha’s example. Can you revisit the same?
Hello,
Understand the taxability of gifts with this example:
Tax treatment for Sender
If you gift shares to your wife, it shall be considered as a ‘transfer’ and thus Capital Gains would arise.
If shares were held for more than 12 months from date of purchase to date of gifting, LTCG or else STCG
Sale Date = Date of transfer
Sale Value = Market Value as on date of transfer
Tax Liability = 10% without indexation benefit (since STT is not paid on transfer)
Tax treatment for receiver
No tax on gift transaction since it is exempt
On sale of shares, Capital Gains would arise
If shares were held for more than 12 months from date of gifting to date of sale, LTCG or else STCG
Purchase Date = Date of receiving gift
Purchase Value = Market Value as on date of receiving gift
Tax Liability = 10% without indexation benefit (since STT is not paid on purchase)
Hope this helps 🙂
Hi, your answer is contradicting the blog post above.
Kindly review your answer. Thanks.
In the case of Gifting to relative (Spouse)
Understand that Tax liability will arise only when we sell the holdings from receiving end, buy value will be the original buy value of the sender.
We need not pay STCG/LTCG for gifting.
Kindly review once again and advise.
Thanks
Hey,
The donor of the gift is not required to pay any tax and so the tax treatment in the hands of the recipient of the gift is based on the cost of acquisition and holding period of the previous owner.