Any sum of money received without consideration—monetary gift may be received in cash or in kind; i.e., cheque, draft, etc.,—by an individual/ HUF will be charged to tax if the aggregate value of such sum of money received during the year exceeds Rs 50,000. However, monetary gift received by an individual or from member by HUF will not be chargeable to tax if it is received from relatives by an individual or is received on the occasion of marriage of the individual or is received under will/ by way of inheritance.
As per Section 2(41) of the Income Tax Act, 1961 ‘relative’ in relation to an individual means spouse of the individual, brother or sister of the individual or the spouse, brother or sister of either of the parents of the individual or parents.
The taxability of the gift is determined on the basis of the aggregate value of gifts received during the year and not on the basis of individual gift. Hence, if the aggregate value of gifts received during the year exceeds Rs 50,000, then total value of all such gifts received during the year will be chargeable to tax.
Tax on immovable property received as gift
If any immovable property is acquired by an individual or a HUF and such property where the consideration is less than the stamp duty value and the difference exceeds higher of `50,000 and 5% of the consideration, the excess of stamp duty value over the purchase price of the property will be treated as income of the purchaser.
Immovable property received by an individual or HUF will not be chargeable to tax if it is received from relatives or from member of HUF or is received on the occasion of the marriage of the individual or is received under will/ by way of inheritance or is received in contemplation of death of the payer or donor or is received from a trust or institution registered under Section 12AA.
Tax on movable property
Any movable property received by an individual or HUF will be chargeable to tax if prescribed movable property is received without consideration and the aggregate fair market value of such property received by the taxpayer during the year exceeds Rs 50,000.
According to the Income Tax Act, 1961 “prescribed movable property” means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.
Prescribed movable property received by an individual or HUF will be chargeable to tax if it is acquired by an individual or HUF and the aggregate fair market value of such properties acquired by the taxpayer during the year exceeds the consideration paid for these properties by `50,000. In other words, the aggregate fair market value of all such properties is higher than the consideration paid and the difference is more than Rs 50,000.
Immovable property received by an individual or HUF will not be chargeable to tax if it is received from relatives by an individual and from member by HUF, it is received on the occasion of the marriage of the individual; it is received under will/ by way of inheritance; it is received in contemplation of death of the payer or donor; it is received from a local authority (as defined in Explanation to Section 10(20).
Source: Tax Guru
By Anuj Gupta
