Search This Blog

October 6, 2010

Taxablity of Transfer over 50 thousand


56 (1) vii)        where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009,—
      (a)  any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
      (b)  any immovable property,—
       (i)  without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
      (ii)  for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consi-deration;
      (c)  any property, other than immovable property,—
       (i)  without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;
      (ii)  for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration :
                Provided that where the stamp duty value of immovable property as referred to in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections :
                Provided further that this clause shall 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 death of the payer or donor, as the case may be; or
      (e)  from any local authority as defined in the Explanation to clause (20) of section 10; or
      (f)  from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or
      (g)  from any trust or institution registered under section 12AA.
                Explanation.—For the purposes of this clause,—
      (a)  “assessable” shall have the meaning assigned to it in the Explanation 2 to sub-section (2) of section 50C;
      (b)  “fair market value” of a property, other than an immovable property, means the value determined in accordance with the method as may be prescribed;
      (c)  “jewellery” shall have the meaning assigned to it in the Explanation to sub-clause (ii) of clause (14) of section 2;
     (d)  “property” means—
       (i)  immovable property being land or building or both;
      (ii)  shares and securities;
     (iii)  jewellery;
     (iv)  archaeological collections;
      (v)  drawings;
     (vi)  paintings;
    (vii)  sculptures; or
   (viii)  any work of art;
      (e)  “relative” shall have the meaning assigned to it in the Explanation to clause (vi) of sub-section (2) of this section;
      (f)  “stamp duty value” means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.]
                The following clause (viii) shall be inserted after the newly inserted clause (vii) of sub-section (2) of section 56 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :
       (viii)  income by way of interest received on compensation or on enhanced compensation referred to in clause (b) of section 145A.

The charging section of the Gift Tax Act, 1957 was suspended w.e.f. 1-10-98 to say that Gifts made after 1-10-98 would not be chargeable to Tax. For all those who thought that the ashes of the Gift Tax Act had become cold, will now find themselves doing some rethinking. The Gift Tax Act is virtually back and this time, with a new cloak and dagger, poised to enter the drawing room of the Income Tax Act in form of this provision.
[a] This sub section will apply only to receipts in hands of individuals and Hindu undivided families and not other tax entities. Thus, if recipients are firms or companies, the same are not covered.
• The word ‘aggregate’ suggests that the amount of Rs. 50,000 must be reckoned vis-à-vis all the movable properties bunched together and not vis-à-vis each individual item.
The threshold limit of Rs. 50,000/- would apply separately for each kind of receipt in the form of cash, immovable property and other property.
  1. The sums of money received at the time your marriage is non taxable even if received from no-relatives including friends.
  2. From 1/4/2006, if you receive gifts from many persons or friends without any occasion and aggregate of such gifts exceeds Rs 50,000 the whole of gift shall be taxable. For example , you received Rs 10,000 from eight friends on 1/9/2006, then for FY 2006-07, you will have to declare income of Rs 80,000 u/s 56(2)(vi) of the I T Act.
  3. Section 56 does not distinguish between Indian money and foreign money. That is whether you receive the money within India or somebody sends money from abroad.
I am a homemaker. My husband has gifted me a sum of Rs 5,00,000 which I invested in a bank fixed deposit. Will it amount to taxable income?
Any sum of money received without consideration (i.e. gift) in excess of Rs 50,000 in a year by an individual or HUF is liable to income tax under section 56(2)(vii) of the Income Tax Act. However, exemption is given on gifts received from relatives, including spouse.
As such, the monetary gift received by you from your husband is not taxable in your hands. Further, any taxable income in respect of investment out of such gift will be clubbed in the hands of your husband under Section 64(1)(iv) of the Income Tax Act,1961.

DTC
Under DTC section 56(2) which with taxation residuary income includes any income in the nature of gifts under sections 56(2)(h) and (i) of DTC which reads as under:
“(h) the aggregate of any money’s and the value of any specified property received, without consideration by an individual or a HUF;
(i) the amount of voluntary contribution received by a person, other than an individual or HUf, from any other person;”
Section 56(3) provides the exceptions for the amount received under 56(2)(h) and is pari materia with section 56(2)(vii) of the Act except that the meaning of the word relative will not include any lineal descendant of a brother or sister of the either the individual or of the spouse of the individual. Likewise the definition of “specified property” under section 56(4) of the DTC is the same as in section 56(2)(vii) except that it does not include Bullion.
Section 56(4)(d) of DTC states that:
“the value of any property by referred to in clause (h) of sub-section(2) shall be:-
(i) the stamp duty value in the case of an immovable property as reduced by the amount of consideration, if any, paid by the assessee; and
(ii) the fair market value in the case of any property as reduced by the amount of consideration, if any, paid by the assessee.


Classifying Loan as Gift
Loan
When you receive a loan, it is implied that you will be repaying it (with or without interest). So, it is not a gift. A gift is something which you are not expected to repay (at-least when the transaction occurs). Also if you pay interest on it, it is deemed that you are paying some consideration for it.

Transferring for a very short time in friends Bank account
 If ultimately he repays you then its not taxable as gift. Even if he uses to make a draft out of it (which in turn he will hand over to you only) it will be taxed as gift. As the draft is made in favour of third person and it can’t be proved that the draft was issued on your behalf or your friend has settled some of his liability.

No comments:

Post a Comment