Taxation of Gifts | Section 56(2)(X) of the IT Act, 1961

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It’s very normal to get gifts from relatives, friends and other family members on various occasions. so, it’s necessary to learn how tax should be levied on receiving the Gift under the Income Tax. Therefore, in this blog, we learn about the Taxation of Gifts as per Section 56(2)(X) of the IT Act, 1961

Generally, If any person is receiving gifts up to Rs. 50,000, then that will be exempt from tax. However, if a person is receiving.

(1). Money (without consideration) more than Rs. 50,000: Full Amount Shall be Taxable. However, if the amount is up to Rs. 50,000, then it will be fully exempt.

(2). Immovable Property:

1. For Free: Stamp Duty Value (SDV) of such property is more than Rs. 50,000, then the entire SDV shall be taxable.
2. Immovable Property by paying less than SDV, and where;

• [SDV (-) Actual Payment]> Rs. 50,000 AND
• SDV is also more than 110% of the Actual Payment Amount

Then Difference between SDV and Actual Payment shall be taxable.

(3). Movable Property: 

1. For Free: Value is more than Rs. 50,000, then Full Value shall be taxable.
2. Movable Property by paying less than Fair Market Value (FMV), and where;

• [FMV (-) Actual Payment] > Rs. 50,000,

Then Difference between FMV and Actual Payment shall be taxable.

Note-1: Movable Property exclusively means; Shares, Jewellery, Drawing, Painting, Sculptures, Archaeological Collection, Any work of Art, and Bullion. If any other movable assets are gifted, then always 100% Exempt without any limit.

Note-2: Gift Received from a relative, on the occasion of Marriage, through Will or Inheritance, at the time of death, from any Charitable Trust, etc shall always be 100% Exempt without any limit.

Read More: Turnover Calculation for Intraday and F&O Trade? | Taxation of Intraday and F&O Incomes

“Let us realize that: the privilege to work is a gift, the power to work is a blessing, the love of work is success!”

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