Tax on Gift of Movable Assets

Tax on Gift of Movable Assets- Applicability & Exemptions

1. When a Gift of Movable asset is chargeable to tax?
2. What is value of taxable amount in case of Gift of Movable Asset?
3. Is gift of car chargeable to tax?
4. In what cases, Gift of movable assets without consideration or at less than fair market value is not chargeable to tax?
5. When a Gift of movable asset at concessional price is chargeable to tax?
6. What is value of taxable amount in case of Gift of Movable Asset at concessional price?
7. Are gifts of movable assets received by a non-resident person chargeable to tax?
8. Are gifts of movable assets received from a Non-Resident or from out of India chargeable to tax?
     

1. When a Gift of movable asset is chargeable to tax?

A Gift of movable asset is chargeable to tax if following conditions satisfies:  

1. The Movable asset should be a prescribed asset. The list of Gifted Prescribed Asset for tax chargeability consists of shares or securities, jewellery, paintings, drawings, archaeological collections, sculptures or any other work of art and bullion being capital asset of the taxpayer.
2. The prescribed movable asset should be received by an Individual or HUF.
3. The prescribed movable asset should be received with-out any consideration.
4. The aggregate fair market value of those gifted prescribed assets received by an Individual or HUF in a financial year exceeds Rs. 50000.
5. Gift is not received from any exempted list of person or occasion.

2. What is value of taxable amount in case of Gift of Movable Asset?

 In case of gift of prescribed movable asset, if the aggregate fair market value in the hands of receiver exceeds Rs. 50000, the total fair market value of all the gifted prescribed asset is chargeable to tax.

 Here the limit of 50000 is just to determine chargeability, it’s not a deduction, if the fair market value of gift exceeds Rs. 50000, then the entire fair market value of gift would be chargeable.

3. Is gift of car chargeable to tax?

 No, gift of car is not chargeable to tax, as car is not the part of prescribed movable asset. 

4. In what cases, Gift of movable assets without consideration or at less than fair market value is not chargeable to tax?

In the following situations, even any prescribed movable asset received by Individual or HUF without consideration or at less than fair market value are not chargeable to tax: - 

1. Gift of any movable asset received by an Individual from the person covered in the definition of “Relative”.
2. Gift of any movable asset received by HUF from its members.
3. Gift of any movable asset received by an Individual from any person on occasion of his /her marriage.
4. Gift of any movable asset received by an Individual or HUF by way of inheritance or by will.
5. Gift of any movable asset received from any fund, foundation, hospital, educational institution, university, trust / Institution, registered under section 10(23C),
6. Gift of any movable asset received from a local authority.
7. Gift of any movable asset received in contemplation of death of payer or donor.
8. Gift of any movable asset received from a trust or institution registered u/s 12AA.
    

5. When a Gift of movable asset at concessional price is chargeable to tax?

 A Gift of movable asset at concessional price is chargeable to tax if following conditions are satisfied: - 

1. The Movable asset should be a prescribed asset. The list of Gifted Prescribed Asset for tax chargeability consists of shares or securities, jewellery, paintings, drawings, archaeological collections, sculptures or any other work of art and bullion being capital asset of the taxpayer.
2. The prescribed movable asset should be received by an Individual or HUF.
3. The prescribed movable asset should be received at less than its fair market value.
4. The aggregate fair market value of those gifted prescribed assets should exceed Rs. 50000 by actual value charged to an Individual or HUF in a financial year.
5. Gift is not received from any exempted list of person or occasion.
    

6. What is value of taxable amount in case of Gift of Movable Asset at concessional price?

In case of gift of prescribed movable asset, if the aggregate fair market value in the hands of receiver exceeds Rs. 50000 by the actual value charged, the total fair market value minus the actual consideration charged of all the gifted prescribed asset is chargeable to tax.

Here the limit of 50000 is just to determine chargeability, it’s not a deduction, if the fair market value of gift is Rs. 180000 and the actual price charged is Rs.100000, here the fair market value exceeds from actual value by Rs. 80000, then the value of gift would be entire Rs. 80000. 

7. Are gifts of movable assets received by a non-resident person chargeable to tax? 

Yes, w.e.f. 05^th July 2019, any gift of movable assets by an any person Resident in India to a Non-Resident person or a foreign company is chargeable as gift of movable assets as income from other sources. That will be treated as income deemed to accrue or arise in India. 

8. Are gifts of movable assets received from a Non-Resident or from out of India chargeable to tax? 

Yes, any gift of movable assets received by a Resident Individual or HUF in India from any person (whether resident or non-resident) other than exempted list, will be chargeable to tax provided his aggregate value of gifts in a financial year from all eligible persons exceeds Rs. 50000.