This article is written by Aashish Ramchand, a Chartered Accountant by profession. Aashish is the co-founder of makemyreturns.com. He also has completed his CFA Level I (American) and is very passionate about writing articles on taxes and tax advisory. He can be reached at connect@makemyreturns.com
Generally, gifts are not regarded as Income chargeable to tax. However by virtue of Section 56(2) any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under other sources subject to exclusions as below:
- Receipts on occasion of marriage of the individual
- Receipts under a will or inheritance
- Receipts received from a relative.
Since 1/10/2009, Section 56(2) has been amended and the scope of gifts and will include even immovable properties or any other property besides sums of money under its ambit.
Gifts that are not taxable at all are those that are received from relatives. Relatives are defined by the following relationships of the individual:
- Parents
- Parents siblings and their spouse
- Siblings
- Spouse of siblings
- Daughter and son
- Spouse of daughter and son
- Spouse
- Spouse’s parents
- Spouse’s siblings and their respective spouse.
Even NRIs are covered as long as they fall in the category of relatives. Therefore an individual Indian resident can receive a tax free gift from an NRI as long as he/she is that individuals relative. Any amount can be received as a gift from a relative. Also the purpose for which the gift is received from a relative is inconsequential as it is completely tax free. Thus a gift received can be used for any purpose ranging from purchasing shares to buying property to even simply keeping it with the bank.
Note on gifting on immovable properties
There is a valuation aspect involved in gifting of immovable properties:-
- If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
- If the property is gifted for a consideration, then the actual value of the property will be taken
In case of other properties:
- If gifted without consideration and fair market value exceeds 50000, then the fair market value will be taken as the final value
- If gifted for a consideration and the FMV less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.
As mentioned earlier NRIs can also give gifts to resident Indians. Therefore, It is important to understand the meaning of an NRI as per the IT act.
An individual will be treated as a non resident in India in any previous year if he fulfils any of the following two conditions:
- he/she is NOT in India in that year for period or periods amounting in all to 182 days or more, or
- Having within the four years preceding that year NOT been in India for a period or periods amounting in all to 365 days or more, and has NOT been in India for 60 days or more in that year.
Dear Sir,
Can donor of gift avail exemption/deduct up to Rs.50000/- from his income for payment tax?
can he send by post or courer
Can he send me by post ?
hi,
i am an Indian resident living in India, my friend from UK wants to send me as a gift a considerable amount of money to my SA account in India.
Can he gift me & what are the tax implications for him & me.
Pl advise.
regards,
Bobby
I am a resident Individual and have booked a residential flat in Mumbai on 15-09-2009, which now it seems to attracts applicability of section 56(2)(vii) for which I have following queries stated hereunder :-
(1) Section 56(2)(vii) is applicable from 01-09-2009 or 01-04-14 ?
(2) According to Letter of Allotment dt. 15-09-2009, the difference of booked value to Ready Reckoner Value of 2009 is Rs. 5.50 Lacs.
(3) Shall I file revised return of AY 2010-11 or 2014-15 ?
(4) Accordingly, shall I add above difference amount of Rs 5.50 lacs in Income from Other Sources and pay tax at normal rates or at highest rate emulated at 30% ?
(5) Shall I have to add interests till-date @ 1.25% per month from booking date of 15-09-2009 or date of S-56(2)(vii) from 31-03-2014 ?
Hi,
I am a PSU retired executive from India, Gifted an House site to my NRI daughter, about few years before.
Now she intends gifting the same site her brothers (child)daughter in India.
1)Can she do it?
2) Are there any TAX implications to either of them.?
3)Are there any alternatives available so that there are no complications to either of them.
Very much appreciate for your valuable advice.
krishna.
Dear sir,
My wife received a gift Rs 2 lac from my grandmother.wheather it is taxable or not. Please advice
I wish to gift a house worth Rs 500,000/- to our daughter. Property is in my wifes name .Property is situated in New Delhi . We reside in Gurgaon.
What would be tax liability ?
Advise.
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Regards
Neha
Whether the gift received from NRI relative requires appoval/permission under the Foreign Contribution (Regulation) Act, 2010
HI, My father is not keeping well these days. He has some investments in post office small saving schemes like MIS which is getting matured in next few days. If we invest again amount in post office senior citizen scheme and keep my daughter as the nominee, then after demise of my father, as per my understanding, my daughter will be the owner of that money..and if we invest that money in the name of my daughter, like bank fixed depostits, will there be any tax liability for me?
Total interest income of the invested amount will be less than 1 lakhs.
sir my wife had been gifted a plot recently by her mother. Now She wants to sell the plot, can she do so?
yes if she receives power of attorney in name of hers by her mother
i am resident indian want to give gift to my daughter at usa. is gift recived in usa is taxable and what formality i have to observe in india and my daughter in usa. pl advise
We are going for a property deal in which the owner is an N R I She has given registered power of autonomy to her father in law .Can her father in law sale received money in her behalf Will I be able to take the loan on this property?
Ifa sum of Rs14 lac is taken as a gift from father in law-whether this amount are totally exempt from tax and this amount being deposited into Bank by issuing separate cheque in one financial year ,is it also exempt from tax.
This is nothing but a discussion or to know actual effect in the hands of receiver who have no other income except husband’s income.
My mother and I are joint owners of a apartment. Can my mother gift her share to me
Sir, really a nice article and questionnaire on NRI.. My question as follows,
I am an indian resident aged 70 and want to transfer my property to my children who have now settled in London for the past many years. What is the best way to transfer the title to them..?
I wish to transfer my property to my daughter who is an Amrican national. I purchased this property in 1984 at a cost of 3,40 lacs.
Please guide about incom tax or any other tax laibility to me or my daughter,
Regards.
Prem Kumar
If Grandmother(NRI) gift rupees to their grand daughter’s Daughter.
Is it taxable or noy in india. How many amount will be non taxable?
Dharmesh here.
My mother gifted me flat 6 months back. My mother had purchased the flat 4 years befire she gifted me. I am selling this flat after 6 months of gift. Is the proceeds liable for long term tax or short term tax and on which value?
Sell price – gift price. Or sell price – purchase price of my mother.
Thnx
We weretotal three partners. And property purchased was in three partners of the firm.Now at present no business is existing and only property is balance.Three parners are as mentioned below are
1) my self elder brother.@20%
2)second is younger brother @40%
3)third is mother@40%
Please guide me if 40% stack holder can give me as gift the property to 20% stack holder and prepare to pay the gift tax as per latest Maharashtra state rules.I shall be thank full to you if you will guid me accordingly as per existing Law.