Questions Exempt gift income u/s 56(2)(iv)

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DIVYANSH TRIPATHY

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July 20, 2019 1:07 am

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Exempt gift income u/s 56(2)(iv)

Thanks sir for your earlier response, i have two question

1.) give and take transaction means i ( i am not taxable person below threshold limit ) gave rs 10000 to my brother , he is taxable person. he refund me the same amount after 2 month . it is just an reverse transaction. how to show rs 10000 ...

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Amlan Dutta

1.) Give and take doesn't translate to income for either parties ...it need not be shown in ITR 1 2.) If it is given in form of gift , it is exempt else not , but better to show it as gift .....he will show it as exempt under exempt income reporting section using other field and mention gift from...

July 20, 2019

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Shriya

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December 18, 2018 12:53 am

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Exempt gift income u/s 56(2)(iv)

Hello Sir,

What will be the treatment of tax if there is exchange of property/money within the relatives specified?

Suppose A gifts a land to B (A & B are Brother & Sister) and B gifts back a certain amount of money to A. This seems like a transaction however because they are 'relatives' specified und...

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Amlan Dutta

Understand that merely because someone is brother and sister ( falls under relative purview) , the transfer of any asset ( cash or immovable ) cannot be automatically treated as gift ....a proper gift deed has to be executed and registered ( only when gift deed is registered does it become legally ...

December 18, 2018

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Shriya

Thanks a lot sir, your quick and detailed explanation is immensely helpful

December 18, 2018

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Amlan Dutta

One point bought by ayush and which marks bearing on this answer is when is a gift qualifies to be one ...a gift without consideration alone can be considered as gift ....Note that , If the gift is made to specified relatives, including spouse, parents and siblings, it is not taxed under the Income Tax Act( however without consideration) A gift is considered valid if it is made voluntarily and without consideration. It is also essential for it to be accepted by the donee.

The consideration portion is tricky here , what must be done is that the consideration should not exist ...the donee can gift a sum of money independently later on
Also, please note that a gift of immovable property amounts to its transfer under the "Transfer of Property Act" Hence, the gift deed needs to be compulsorily registered with the sub-registrar in the area where the property is situated.

A copy of the gift deed, title deeds of the property, encumbrance certificate, statement of particulars of the property, its market value and the extract of assessment register of the property must be submitted at the time of registration The stamp duty is calculated as a percentage of the market value of the gifted property and differs from state to state. Such a gift to relatives attracts stamp duty at a lower rate and is sometimes exempt in some states ...if consideration has already not been taken , get it delayed else department may not accept it to be a gift ...(note had it been a property transfer to a third party( not relative ), then the rules of the game change completely........

Take a detailed opinion of a practising chartered accountant for this case.

(The gift must be made and accepted in the lifetime of both the donor and donee. The acceptance is shown through a gift deed, which is an agreement spelling out that the donor wants to gift the property listed in the deed to the donee, and that the donee accepts it. The signatures of both the parties are affixed in the presence of at least two witnesses)

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December 18, 2018

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AYUSH

But sir remember these transactions are Been classified as cross relative transactions if the transaction are been done to avoid tax like as you say first property transfer between a to b and a certain sum was also transferred from b to a in consideration will lead to tax implications.

December 18, 2018

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Amlan Dutta

You are right , the gift by definition itself shall fail if there is a consideration aspect to it ...but if the consideration can be marked as separate activity and much later as a independent event not related to the property , there should be no problem

December 18, 2018

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Amlan Dutta

December 18, 2018

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Shriya

Thanks a lot sir, your quick and detailed explanation is immensely helpful

December 18, 2018

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Amlan Dutta

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December 18, 2018

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Amlan Dutta

December 18, 2018

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AYUSH

December 18, 2018

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Paritosh Jain

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October 5, 2018 7:34 am

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Exempt gift income u/s 56(2)(iv)

I wish to gift my wife Rs 65 Lakhs through bank cheque. What all formalities need to be completed for this.

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You can execute a gift deed by visiting a lawyer ...the deed has a certain drafting style ..it mentions the donor and donee details , the relationship , the mode of payment , the amount , the tax payment details etc (lawyer shall be able to guide on this )...Since wife falls under the definition of ...

October 5, 2018

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Vishal

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August 19, 2018 5:09 pm

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Exempt gift income u/s 56(2)(iv)

I had received cash gift(say 10 lakhs) from my father in 2015.I got my pan no. in 2017.In that case i cant file itr for 2015(income for 2015 was below min. taxable limit i.e;<2,00,000).Thus what should i do??Just maintain the record in my balance sheet and C/f.Or any other solution?(Can i file itr f...

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Amlan Dutta

Any sum received by relative as covered under Section 56(2) of Income Tax Act,1961 is exempt ...Here, father is covered in the definition of relative and so these income is exempt ...if this was your only source of income, then it being exempt and gross total income falling below threshold , you ar...

August 19, 2018

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