Special: Gift from kin not taxable
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If I receive a non-agricultural land from my uncle (mother’s brother) as a gift, what is my tax liability? My uncle wants to gift the land either to me or my mother. The market value of this land is around Rs 15 lakh. If I accept this gift, will its market value be included in my taxable income for the financial year 2013-14? Kindly also clarify if registration in case of gift is mandatory.
Swapna Shah
The section 56(2)(vii) of the Income-Tax Act, 1962 provides that value of sum of money/immovable property/movable property received without consideration or for inadequate consideration is chargeable to income-tax in the assessment of the recipient under the head “Income from other sources”, in cases where an individual or a HUF receives, in any previous year, from any person or persons, on or after 1-10-2009 — (1) any sum of money, without consideration (i.e. gift), the aggregate value of which exceeds Rs 50,000, the whole of the aggregate value of such sum will be income in the hands of the recipient; (2) any immovable property being land or building or both, without consideration, the stamp duty value of which exceeds Rs 50,000, the stamp duty value of such property will be income in the hands of the recipient; (3) any property other than immovable property, without consideration (i.e. gift), the aggregate fair market value of which exceeds Rs 50,000, the whole of the aggregate fair market value of such property will be income in the hands of the recipient (i.e.donee); (4) any property other than immovable property, for a consideration which is less than the fair market value of such property, by more than Rs 50,000 (inadequate consideration), the difference between the fair market value of such property and such consideration will be the income of the recipient.
However, the above provisions will not apply to any sum of money or any property received – (a) from any relative; or (b) on the occasion of the marriage of the individual; or (c) under a will or by way of inheritance; or (d) in contemplation of dea-th of the payer.
The term ‘relative’ for this purpose means: (1) spouse of the individual (2) brother or sister of the individual (3) brother or sister of the spouse of the individual (4) brother or sister of either of the parents of the individual (5) any lineal ascendant or descendant of the individual (6) any lineal ascendant or descendant of the spouse of the individual and (7) spouse of the person referred to in (2) to (6) above. There will not be any income-tax liability as your uncle is covered under the definition of ‘relative’ mentioned above. It is pertinent to note that the gift of an immovable property will be complete only on registration.
(Kamal Rathi is a Hyderabad-based CA and can be contacted at kamalrathi.ca@gmail.com)
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