IT Café Online

What are the recent changes in the Income Tax rules with respect to gift tax?

The Income Tax Act 1961 has been amended with effect from October 1, 2009 to provide that any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs.50,000, will become taxable in the hands of the doanee, being an individual or HUF.

Therefore, any such person who receives a gift of any such property on or after October 1, 2009 must pay the income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years.

The following types of gifts will, however, not be subject to tax, i.e. gifts (a) from a person who is a relative; (b) on the occasion of marriage of the individual; (c) under a will or by way of inheritance; (d) in contemplation of death of the donor; (e) from any local authority as defined in the Explanation to section 10(20) of the Act; (f) from any fund or trust established under section 10(23C) of the Act; (g) from any trust or institution registered under section 12AA of the Act.

Earlier only cash gifts (and not gifts in kind) exceeding Rs.50,000 in the aggregate were subject to tax.