Taxation of Gifts under Income Tax Act (Section 56(2)(x))

🎁 Taxation of Gifts under Income Tax Act (Section 56(2)(x))

❗ Gift = Income? YES, Sometimes

Many people believe gifts are always tax-free.

👉 Wrong assumption — wrong reporting leads to notices & penalties.

🔍 What Does the Law Say?

If a person receives money, property or assets without consideration or for inadequate consideration,

it may be taxable as “Income from Other Sources”.

💰 Gift in Cash

🟢 Not taxable if total gifts ≤ ₹50,000 in a financial year

🔴 Taxable if total gifts > ₹50,000

➡️ Entire amount becomes taxable (not only excess)

🏠 Gift of Immovable Property (Land / Building)

1️⃣ Without consideration

✔️ Stamp duty value ≤ ₹50,000 → Not taxable

❌ Stamp duty value > ₹50,000 → Fully taxable

2️⃣ For inadequate consideration

If difference > ₹50,000,

👉 Difference is taxable as income

💎 Gift of Movable Property

Includes:

✔️ Shares

✔️ Jewellery

✔️ Bullion

✔️ Artwork / Paintings

🟢 If fair value ≤ ₹50,000 → Not taxable

🔴 If > ₹50,000 → Fully taxable

👨‍👩‍👧 Gifts from RELATIVES – Always Exempt

No limit if gift received from:

✔️ Parents

✔️ Spouse

✔️ Children

✔️ Brother / Sister

✔️ Lineal ascendants / descendants

✔️ In-laws

📌 Relationship proof recommended

🎉 Other Fully Exempt Gifts

✅ On marriage of individual

✅ Under will or inheritance

✅ From local authority

✅ From registered trust or institution

⚠️ Common Mistakes Seen in Practice

❌ Showing taxable gift as capital receipt

❌ Ignoring stamp duty value

❌ No gift deed for large amount

❌ Believing “family friend = relative” (Not true)

💡 Professional Tip

📄 Always prepare gift deed

🏦 Prefer banking channels

📊 Proper disclosure in ITR avoids future scrutiny

🔖 Hashtags

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