Taxability Of Monetary Gifts Received By An Individual Or HUF

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Taxability of monetary gifts received by an individual or HUF

Taxability of monetary gifts received by an individual or Hindu Undivided Family (HUF)

If the following conditions are satisfied then any sum of money received (i.e, monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax (*):

Sum of money received without consideration.
The aggregate value of such sum of money received during the year exceeds Rs. 50,000.

(*) Refer next FAQ for situations in which sum of money received by an individual or HUF is not charged to tax, i.e., monetary gift is not charged to tax.

Cases in which sum of money received without consideration, i.e., monetary gift received by an individual or HUF is not charged to tax?

If any sum of money is received on or after 01/10/2009 by an Individual or HUF without any consideration and the aggregate value of which exceeds Rs. 50,000 during the previous year, then the whole of the aggregate value of such sum is chargeable to tax.

However, in the following cases nothing will be charged to tax in respect of any sum of money received by an Individual or HUF without any consideration, if the same is received:

from any relative or by a HUF from its members; or
on the occasion of the marriage of the individual; or
under a will/ by way of inheritance; or
in contemplation of death of the payer or donor as the case may be; or
from a local authority as defined under Explanation to clause (20) of section 10 of the Income-tax Act, 1961; or
from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10 or
by any fund, trust, institution, any university, other educational institution, any hospital, other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or(applicable if the money is received on or after 1^st day of April, 2017)
from or by a trust or institution registered under section 12AA/ section 12AB; or
from or by a trust or institution registered under section 12A; or(applicable if the money is received on or after 1^st day of April, 2017)
by way of transaction not regarded as transfer under section 47(i)/(iv)/(v)/(vi)/(via)/ (viaa)/(vib)/ (vic)/ (vica)/ (vicb)/ (vid)/ (vii)
from an Individual by a trust created or established solely for the benefit of relative of the Individual.(applicable if the money is received on or after 1^st day of April, 2017)
from such class of person’s and subject to such conditions as may be prescribed.

As per provisions of Section 56 Gift received from relatives are exempt from tax and following persons would be considered as relative 

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant or descendent of the individual;

(f) Any lineal ascendant or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

Gift received only on the occasion of marriage of the individual is not charged to tax. Apart from marriage there is no other occasion in which gift received by an individual is not charged to tax. Hence, gift received on occasions like birthday, anniversary, etc. will be charged to tax.

Friend is not a relative as defined in the list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).

If the aggregate value of monetary gift received during the year by an individual or HUF exceeds Rs. 50,000 and the gifts are not covered under the exceptions prescribed in the preceding FAQ, then gifts whether received from India or abroad will be charged to tax.

Sum of money received without consideration by an individual or HUF is chargeable to tax if the aggregate value of such sum received during the year exceeds Rs. 50,000.

The important point to be noted in this regard is the “aggregate value of such sum received during the year”. The taxability of the gift is determined on the basis of the aggregate value of gift received during the year and not on the basis of individual gift. Hence, if the aggregate value of gifts received during the year exceeds Rs. 50,000, then aggregate value of such gifts received during the year will be charged to tax.

Sum of money received without consideration by an individual or HUF is charged to tax if the aggregate value of such sum received during the year exceeds Rs. 50,000. Once the aggregate value of monetary gift received during the year exceeds Rs. 50,000, then the aggregate value of gift received during the year will be charged to tax.

Cases in which the value of immovable property received by an individual or HUF without consideration (i.e. by way of gift) is not charged to tax

Stamp duty of immovable property is chargeable to tax, if immovable property is received by an Individual or HUF without any consideration and the stamp duty value exceeds Rs. 50000.

However, in the following cases nothing will be charged to tax in respect of immovable property received on or after 01/10/2009 without any consideration, even if the stamp duty value exceeds Rs. 50,000:

from any relative or by a HUF from its members; or
on the occasion of the marriage of the individual; or
under a will/ by way of inheritance; or
in contemplation of death of the payer or donor as the case may be; or
from a local authority as defined under Explanation to clause (20) of section 10of the Income-tax Act, 1961; or
from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C); or
by any fund, trust, institution, any university, other educational institution, any hospital, other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or (applicable if the property is received on or after 1^stday of April, 2017)
from or by a trust or institution registered under section 12AA/ section 12AB ; or
from or by a trust or institution registered under section 12A; or (applicable if the property is received on or after 1^st day of April, 2017)
by way of transaction not regarded as transfer: (applicable if the property is received on or after 1^stday of April, 2017)

1. property received by way of distribution at the time of total or partial partition of HUF [ 47(i)]

2. property received by an Indian subsidiary company, if the parent company or its nominees hold the whole of the share capital of the subsidiary company [ 47(iv)] (Inserted by Finance Act, 2018 i.e. w.e.f 01.04.2018)

3. property received by an Indian holding company, if the whole of the share capital of the subsidiary company is held by the holding company [ 47(v)] (Inserted by Finance Act, 2018 i.e. w.e.f 01.04.2018)

4. property received by amalgamated company from amalgamating company in the scheme of amalgamation, if amalgamated company is an Indian company. [ 47(vi)]

5. property received by resulting company from demerged company in the scheme of demerger, if resulting company is an Indian company. [ 47(vib)]

6. property received by a banking institution from banking company in a scheme of amalgamation of a banking company with a banking institution sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949) [ 47(viaa)]

7. property received by successor co-operative bank from predecessor co-operative bank in a business reorganisation. [ 47(vica)]

8. from an Individual by a trust created or established solely for the benefit of relative of the Individual. (applicable if the property is received on or after 1^stday of April, 2017)

9. from such class of persons and subject to such conditions, as may be prescribed.

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