5th Series of FAQs ON GIFT RECEIVED BY ON INDIVIDUAL OR HUF

Q. 17 An individual received gift of jewellery from his friends. The total value of jewellery received during the year as gift from all the friends amounted to Rs. 84,000. What will be the tax treatment of gift in this case?

If the aggregate fair market value of prescribed movable property received by an individual or HUF without consideration during the year exceeds Rs. 50,000, then the total value of such properties received during the year without consideration will be charged to tax. In this case the total value of jewellery received during the year exceeds Rs. 50,000 and hence, Rs. 84,000 will be charged to tax.

Q. 18 Does any taxability arise if prescribed movable property is received by an individual or HUF for less than its fair market value?

If the following conditions are satisfied then prescribed movable property (*) received by an individual or HUF will be charged to tax?($):

• Prescribed movable property is acquired by an individual or HUF.
• The aggregate fair market value of such properties acquired by the taxpayer during the year exceeds the consideration of these properties by more than Rs. 50,000. In other words, the aggregate fair market value of all such properties is higher than the consideration and the difference is more than Rs. 50,000.

(*)?Prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.

Considering the above definition, nothing will be charged to tax if any movable property (other than those covered in the above definition) is received for less than its fair market value?e.g.,?Nothing will be charged to tax in respect of a television set received for less than its fair market value because a television set is not covered in the definition of prescribed movable property.

($)?Refer next FAQ for situations in which prescribed movable property received for less than its fair market value is not charged to tax.

?Q. 19 Are there any cases in which prescribed movable property received for less than its fair market value by an individual or HUF is not charged to tax?

If the conditions given in preceding FAQ are satisfied, then prescribed movable property received (i.e.?acquired) by an individual or HUF for less than its fair market value is chargeable to tax. However, in the following cases nothing will be charged to tax in respect of prescribed movable property received for less than its fair market value:

• Property received from relatives (*).
• Property received by a HUF from its members.
• Property received on the occasion of the marriage of the individual.
• Property received under will/ by way of inheritance.
• Property received in contemplation of death of the donor.
• Property received from a local authority as defined under?section 10(20) ?of the Income-tax Act.
• Property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in?section 10(23C) .
• Property received from a trust or institution registered under?section 12AA .

(*)?Relative for this purpose means:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(c) Brother or sister of the spouse 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).