TAXABILITY OF GIFTS — SECTION 56

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TAXABILITY OF GIFTS — SECTION 56

SECTION 56* - TAXABILITY OF GIFTS

Particulars

Section 56(2)(x)

Recipient

Any Person

Giver

Any Person

Period covered

On or after 1 April 2017

Amount to be taxed

Consideration

Amount to be taxed

a.

Sum of money received without consideration, the aggregate value of which exceeds INR 50,000/-

Whole of the aggregate value

b.

Immovable property

 

 

  • Received without consideration, the stamp duty value of which exceeds INR 50,000/-

Stamp duty property

 

  • Received for a consideration, where stamp duty value exceeds such consideration by more than higher of the following:

    1. INR 50,000; and

    2. an amount equal to —

      1. 10% (w.e.f 1-4-2021 of the consideration) in case of immoveable property other than that covered at

      2. below

        (b) 20%(w.e.f 1-4-2021 of the consideration) in case of purchase of residential unit during 12 November 2020 to 30 June 2021 by way of first- time allotment to any person for consideration not exceeding INR 2 crore

  • Stamp duty value on date of agreement for transfer of immovable property to be considered, if date of agreement and the date of registration are not the same. This is applicable only if consideration or part thereof, is received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed (As per Rule 6ABBA, such modes are credit card, debit card, net banking, Immediate Payment Service (IMPS), Unified Payment Interface (UPI), Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) and Bharat Interface for Money (BHIM) Aadhar Pay) on or before the date of agreement for transfer of such immovable property.

  • Where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in section 50C(2) of Act, the AO may refer to a Valuation Officer and the provisions of section 50C and section 155(15) shall apply in relation to the stamp duty value of such property.

Stamp duty property as consideration.

c.

Any property, other than immovable property

 

 

  • Received without consideration, the aggregate fair market value (FMV) of which exceeds INR 50,000/-

Whole of aggregate FMV

 

  • Received for a consideration less than the aggregate FMV by an amount exceeding INR 50,000/-

Aggregate FMV of such property as exceeds such consideration


Particulars

Section 56(2)(x)

Does not apply

Any sum of money or any property received:

  1. from any relative

  2. on the occasion of marriage of the individual

  3. under a will or by inheritance

  4. in contemplation of death of payer or donor

  5. from local authority as defined in section 10(20)

  6. from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section 10(23C)

  7. From or by any trust or institution registered under section 12A or section 12AA or 12AB.

W.e.f 1-4-2023, the exception at (VI) and (VII) above shall not apply in case where any sum of money or property is received by the following persons referred to under section 13(3) of the Act:

  1. the author of the trust or the founder of the institution;

  2. any person who has made a substantial contribution to the trust or institution, that is to say, any person whose total contribution up to the end of the relevant PY exceeds INR 50,000;

  3. where such author, founder or person is a Hindu Undivided Family (HUF), a member of the family;

    (cc) any trustee of the trust or manager (by whatever name called) of the institution;

  4. any relative of any such author, founder, person, member, trustee or manager as aforesaid;

  5. any concern in which any of the persons referred to in clauses (a), (b), (c), (cc) and (d) has a substantial interest.

  1. by any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv)/(v)/(vi)/(via);

  2. By way of transaction not regarded as transfer under sections:

    • 47(i) or 47(vi) or 47(via) or 47(viaa) or 47(vib) or 47(vic) or 47(vica) 47(vicb) or 47(vid) or 47(vii) (inserted vide Finance Act 2017 w.e.f. 1-4-2017);

    • 47(iv) or 47(v) (inserted vide Finance Act, 2018 w.e.f. 1-4-2018);

    • 47(viiac) or 47(viiad) or 47(viiae) or 47(viiaf) (inserted vide Finance Act, 2021 w.e.f. 1-4-2022).

  3. from an individual by a trust created or established solely for the benefit of relative of the individual

  4. from such class of persons and subject to such conditions, as may be prescribed (Refer Rule 11UAC)

  5. by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 subject to such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf (inserted vide Finance Act, 2022 w.r.e.f 1-4-2020)

  6. by a member of the family of a deceased person, -

  1. from the employer of the deceased person; or

  2. from any other person or persons to the extent that such sum or aggregate of such sums does not exceed ten lakh rupees,

    where the cause of death of such person is illness related to COVID-19 and the payment is –

    1. received within twelve months from the date of death of such person; and

    2. subject to such other conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Relative means

  • In case of an Individual —

    1. spouse of the individual;

    2. brother or sister of the individual;

    3. brother or sister of the spouse of the individual;

    4. brother or sister of either of the parents of the individual;

    5. any lineal ascendant or descendant of the individual;

    6. any lineal ascendant or descendant of the spouse of the individual;

    7. spouse of the person referred to in clauses (ii) to (vi);

  • In case of HUF, from any member thereof.

Property means

The following capital asset of the assessee:

  1. Immovable property being land or building or both

  2. shares and securities;

  3. jewellery;

  4. archaeological collections;

  5. drawings;

  6. paintings;

  7. sculptures;

  8. any work of art;

  9. bullion.

  10. virtual digital asset (w.e.f 1-4-2023)

Fair Market Value means

FMV of a property, other than an immovable property, means the value determined in accordance with the prescribed method (Rules 11U and 11UA).

Rule for determining FMV

The CBDT had notified final rules on 12th July, 2017 (Notification No. 61 /2017/F. No. 149/136/2014- TPL) (i.e. Rule 11UA(1)(c)(b)/(c) and 11UAA) for determining FMV for unquoted equity shares for the purpose of section 56(2)(x) and section 50CA of the Act which is applicable from with effect from 1 April 2018.

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