Gift from Relative "Exempted from Income Tax"

Friends,  Gifts received by an individual/HUF are not taxable which have been received from the following :-

 (i)    Money or Property received by from a relative, or Relative means:-

• (a) spouse, (पति और पत्नी)
• (b) brother or sister, (भाई और बहन) 
• (c) brother or sister of the spouse, (साला और साली)
• (d) brother or sister of either of the parents, (चाचा, चाची, मामा और मोसी)
• (e) any lineal ascendant or descendent, (लड़का,लड़की,पोता,पोती, पड़ पोता , पड़ पोती)
• (f) any lineal ascendant or descendent of the spouse,
• (g) spouse of the person referred in clause (a) to (f).

 (ii)   Money or Property received by an individual on occasion of his marriage, or 

 (iii)   Money or Property by an individual/H.U.F., under a will or by way of inheritance, or 

 (iv)   Money or Property received in contemplation of death of the payers, or 

 (v)   Money or Property received from any local authority, or 

 (vi)   Money or Property received from any fund, foundation, university, educational institution, hospital, medical institution, trust, institution referreed u/s 10(23), or 

 (7)   Money or Perperty received from any trust or institution registered u/s 12AA. [Sec, 2(24) (xv) read with Sec. 56(2)(vii)].

*** "Property" means immovable property or movable property with some condition. 

Income Tax on Gift received from Spouse (Wife/Husband)

It is important to know for all that there is no Income Tax if an spouse gift to each other.  I mean to say Wife can gift any amount to her Husband and Husband can gift any amount to his Wife.  

In such type of gift, it is important to know that if payee of gift (गिफ्ट पाने वाला) earn any income from gifted amount  like Interest, Rent etct, Income will be taxable in the hand of Payer (गिफ्ट देने वाला).  It means income will be clubbed in the hand of Gift's Payer. 

Therefore, before taking such gift, everyone should understand these type of complication through Spouse's Gift.

No doubt that gift received from any relative is totally free.  List of relative is detailed here. 

Avail Double Benefit of Basic Income Tax Exemption i.e. Rs.1,60,000/- etc

Friends

                    As you know that  we can take double benefit of  Income Tax Basic Exemption Limit after creating H.U.F.  Presently this basic exemption limit for male as per Income Tax Act for the Financial Year 2010-11 is Rs. 1,60,000/-.  It means we can avail  benefit of Rs. 3,20,000/- as basic exemption just double of Rs. 1,60,000.00.   One exemption can be availed  as Individual Status and second exemption as H.U.F. 

                       For creating H.U.F.  there is first need of  a written Gift Affidavit  on a stamp paper of Rs. 10/- from  any relative.   After marriage as an individual receive  gift from his relative, H.U.F. creates automatically and eligible to take double benefit of   basic exemption of Rs. 1,60,000/(for man).  After that  Pan Number can be applied  in the name of H.U.F.   Format of H.U.F. Affidavit is given as under:-

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AFFIDAVIT

            I _______________________(donor)  s/o,w/o ____________________________ aged ___ years old, Hindu by caste, resident of ________________________________________ do hereby solemnly affirm and declare as under:-

1.  That i have given a sum of Rs. ______________(Rupees_____________________) by way of Cash or Cheque Number __________ dated __________  drawn on ____________(bank name) as gift to M/S . _____________  H.U.F. out of my natural love and affection towards them.
2. That the said H.U.F. _______________H.U.F. consists of _________________ Karta, his wife Mrs.________________, constituting as Hindu Undivided Family. 
3. That the said gift of Rs. _____________(Rupees_______________) is given to the said Joint Hindu Family as a whole for full enjoyment and possession by the family exclusively and not to individually anyone. 
4. That Sh. _________________ being Karta of the said Joint Hindu Family for and on behalf of the H.U.F. (Sh. ________________) have accepted the said gift of Rs. ___________.
5. That the said Joint Hindu Family shall be exclusive owner of the said sum after __________ and will be enjoyed, used and possessed by it to the exclusion of all whatsoever.  I and my heir, successors, administrators shall have no rights, titles and claim on the said sum after ____________. 
6. That the said sum is paid out of my withdrawal from ________________. 
7. That I am Income Tax Assessee having business/salary/other  income  with Income Tax Offier, ward- __, _________ vide Permanent Account Number :-______________.

Date  :-                                                                                            Deponent 

Place :-

            I (________________) being Karta of M/S ____________________ H.U.F. hereby accept the aforesaid gift of Rs. ___________ by cash or cheque, with thanks and acknowledge the same.

Date  :-                                                                                             Donee

Place :-                                                                                             (Karta of H.U.F.)

Witness with complete Address:-

1.  _________________________________

     _________________________________

2.  _________________________________

     _________________________________

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Use of Affidavit =  Basic requirement while opening bank account in the name of HUF.
Gift Deed Format (Click Here)
Calculate your income tax w.e.f. 01.04.2005 to update with in minute. (click here)

Gift Tax w.e.f. 01.10.2009

No.402/92/2006-MC (21 of 2009)

Government of India / Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

***

New Delhi dated the 30th September 2009

PRESS RELEASE

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- kind.

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