The Income Tax Act 1961 (the Act) has been amended with effect from 1st October 2009
to provide that any gift-in-kind, being an immovable property or any other property, the value of
which exceeds Rs.50,000 (rupees fifty thousand), will become taxable in the hands of the donee,
being an individual or a Hindu Undivided Family (HUF), as income from other sources under
clause (vii) of sub-section 2 of section 56 of the Act. Therefore, any such person who receives a
gift of any such property on or after 1st October 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.
Relative is defined in the Act as (i) spouse; (ii) brother or sister; (iii) brother or sister of
the spouse; (iv) brother or sister of either of the parents; (v) any lineal ascendant or descendant;
(vi) spouse of any of the relative at clauses (ii) to (v); of the individual. Gifts received from
these relatives will not be subject to tax.
Earlier cash gifts exceeding Rs.25,000 were subject to tax with effect from 1st April
2004. Later the Act was amended with effect from 1st April 2006 to tax all cash gifts having
aggregate value exceeding Rs.50,000. Cash gifts also enjoy exemptions as is available for giftsin-
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