Any receipt without consideration or
receipt with inadequate consideration from relatives (as defined under Income
Tax Act) is not taxable. However, certain receipt without consideration
or receipt with inadequate consideration even from non-relatives is not
taxable. This can be very effectively used as a tool for tax planning.
Here, receipt without consideration
or receipt with inadequate consideration includes receipt of cash, movable and
immovable property. As per the Explanation provided u/s 56(2)(vii), Property
means the following Capital Asset (as defined u/s 2(14)) of the assessee
namely:-
a.
immovable property being land or building or both;
b. shares
and securities;
c.
jewellery;
d.
archaeological collections;
e.
drawings;
f.
paintings;
g.
sculptures;
h. any
work of art;[or]
i.
bullion
Thus, receipt of above Capital Asset
by Individual or HUF as gift will attract Income Tax u/s 56(2)(vii).
Gift from relatives is not at all
taxable under Income Tax Act,1961 but in following cases gift from
Non-Relatives is also not taxable:-
1. Gift in cash(includes cheque and
draft) from Non-relatives :-
In country like India, where we
celebrate festivals almost every week, family function almost every month on
occasion of birthdays, anniversaries etc., receipt of cash from non-relatives
on these occasion is very common. Aggregate cash gift received in
Previous Year (as defined u/s3 of Income Tax Act) from non-relatives will not
be taxable if the amount does not exceed Rs.50,000/-.
E.g.
Cash gifts from-
|
Case-A
|
Case-B
|
Mr. Akbar
|
10,000
|
10,000
|
Mr. Birbal
|
20,000
|
20,000
|
Mr. Tansen
|
20,000
|
20,001
|
Total receipts during the Previous
Year
|
50,000
|
50,001
|
Taxability
|
Not Taxable
|
Fully Taxable
|
Thus, even a single rupee received
in excess of Rs.50,000 will make the whole amount taxable.
2. Gift in the form of Movable
Property without consideration from Non-relatives :-
Movable Property received by
Individual or HUF from anybody (non-relatives) without consideration, will not
be taxable if aggregate of Fair Market Value of property received in
Previous Year does not exceed Rs.50,000.
E.g.
Property received from-
|
Type of Property
|
Case-A
|
Case-B
|
Mr. Amar
|
Shares
|
25,000
|
25,000
|
Mr. Akbar
|
Gold
|
15,000
|
15,000
|
Mr. Anthony
|
Paintings
|
10,000
|
11,000
|
Total receipts during the Previous
Year
|
50,000
|
51,000
|
|
Taxability
|
Not Taxable
|
Fully Taxable
|
3. Gift in the form of Movable
Property for inadequate consideration from Non-relatives :-
Movable Property received by
Individual or HUF from anybody (non-relatives) for inadequate consideration,
will not be taxable if aggregate of the difference between Fair Market
Value of property received in the Previous Year and Consideration actually paid
by the recipient in the Previous Year does not exceed Rs.50,000.
E.g.
Property received from-
|
Type of Property
|
Fair Market Value (Rs.)
(A)
|
Consideration actually paid by the
recipient (Rs.) (B)
|
Difference (Rs.)
(A-B)
|
Mr. Ashok
|
Shares
|
40,001
|
1
|
40,000
|
Mr. Chanakya
|
Gold
|
10,100
|
100
|
10,000
|
Total receipts during the Previous
Year
|
50,000
|
|||
Taxability
|
Not Taxable
|
4. Gift on occasion of marriage:-
On occasion of marriage an
Individual can receive gifts of any amount from anybody i.e. there is no limit
on the amount of gift received. E.g. Mr. Rahul close friend of Miss Sonia gifts
Miss Sonia on her wedding flat worth Rs.25,00,000. This transaction is not at
all taxable, as gift, in the hands of Sonia. Further, Mrs. Sonia gets divorced
and remarries Mr.Rajeev, Mr.Rahul gifts her this time Gold worth Rs.25,00,000.
Again this transaction is also not taxable in the hands of Miss Sonia as gifts
received on re-marriage (after getting legally separated from former husband)
are also not taxable. Thus, marriages can be said to be the best tool for tax
planning!!!!
5. Gift by will/Gift on
contemplation of death of payer:-
Any property or cash received by
will or on contemplation of death of payer is not taxable.
6. Gift of property other than
Capital Assets:-
Suppose an individual or HUF
receives following assets as gift:-
a.
Mobile Phone
b.
Agricultural land
c.
Wrist Watch
d. Car
e.
‘Khandarh’- Building in dilapidated condition etc. (Baladin v. Lakahan Singh
AIR 1927 All.214)
The above gifts from non-relatives
will not be taxable as the same are not covered in the definition of Capital
Asset. E.g. Mr. Narendra provides professional service to clients. From one
client he receives no consideration but gets a Phone worth Rs.60,000 as gift.
Treating it as gift it will not be taxable.
Note:- Gift from employer to
employee will be taxable under the head salary as perquisite.
*Benefit Derived out of the above
provisions:
Thus, in a year an individual can
receive minimum income/receipts of Rs.1,50,000 from non-relatives without
paying tax. Joint families can get maximum benefits out of these provisions.
E.g. Mr. Vadra gets following gifts
from Non-relatives.
Cash gift from-
|
Amount(Rs.)
|
Mr. Amit
|
15,000
|
Mr. Chidambaram
|
10,000
|
Mr. Kapil
|
10,000
|
Miss Priyanka
|
15,000
|
Movable Property-
|
|
Mr. Arvind
|
12,000
|
Mr.Sisodia
|
12,000
|
Mr.Kasab
|
12,000
|
Mr. Yakub
|
14,000
|
Movable Property-(Inadequate
consideration)
|
|
Mr. Nitish
|
18,000
|
Mr. Prabhu
|
20,000
|
Mr. Jitan
|
12,000
|
Total (Non-Taxable)
|
1,50,000
|
Further, if Mr. Vadra has formed his
HUF then HUF can again get minimum
- See more at:
http://taxguru.in/income-tax/receipt-consideration-gift-nonrelatives-tool-tax-planning.html#sthash.WOsTj1Wr.dpuf
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