Gifts of property (gifts-in-kind) above value of Rs.50,000 become taxable from 1st October 2009

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The Income Tax Act 1961 (the Act) has been
amended with effect from 1st October 2009
to provide that any gift-in-kind, being an
immovable property or any other property,
the value of which exceeds Rs.50,000
(rupees fifty thousand), will become taxable
in the hands of the donee, being an individual
or a Hindu Undivided Family (HUF),
as income from other sources under clause
(vii) of sub-section 2 of section 56 of the Act.


Therefore, any such person who receives a gift
of any such property on or after 1st October 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 following types of gifts will, however, not be subject to tax,
i.e. gifts (a) from a person who is a relative;
(b) on the occasion of marriage of the individual;
(c) under a will or by way of inheritance;
(d) in contemplation of death of the donor;
(e) from any local authority
as defined in the Explanation to section 10(20) of the Act;
(f) from any fund or trust established under section 10(23C) of the Act;
(g) from any trust or institution registered under section 12AA of the Act.



Relative is defined in the Act as
(i) spouse; (ii) brother or sister;
(iii) brother or sister of the spouse;
(iv) brother or sister of either of the parents;
(v) any lineal ascendant or descendant;
(vi) spouse of any of the relative at clauses
(ii) to (v); of the individual.
Gifts received from these relatives will not be subject to tax.



Earlier cash gifts exceeding Rs.25,000 were subject to tax
with effect from 1st April 2004. Later the Act was amended with
effect from 1st April 2006 to tax all cash gifts having aggregate
value exceeding Rs.50,000. Cash gifts also enjoy exemptions
as is available for gifts-in-kind.