Gift Transactions Taxable or Exempted

1. Section 56(2)(x) provides that this section shall not apply to any sum of money or any property received from any relative. And the definition of relative includes Father and Mother. Thus, the gifts are not taxable in the hands of recipient under Section 56(2)(x) of the Income-tax Act, 1961 (in the said case).

However, As per Section 269ST, any person who enters into a transaction of Rs 2 Lakh or above in cash, will be liable to a penalty of an amount equivalent to the amount of transaction.

It may be pertinent to note that Section 269ST of the Income Tax Act, 1961 states that

No person shall receive an amount of two lakh rupees or more—

 (a) in aggregate from a person in a day; or

 (b) in respect of a single transaction; or

 (c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed.

Thus, the gifts received from Father or Mother are not taxable as per Section 56(2)(x), however a penalty of an amount equivalent to the amount of transaction can be imposed where the amount of gift exceeds Rs. 2,00,000 in cash.

2. Section 56(2)(x), provides that the following shall not be taxable:

• Any sum of money without consideration where Sum is less than Rs.50,000;
• Any immovable property such as land, building etc without consideration where Stamp duty value* is less than Rs 50,000;
• Any immovable property for inadequate consideration where Stamp duty value* does not exceeds consideration by Rs 50,000;
• Any property (jewellery, shares, drawings etc) other than immovable property without consideration where Fair market value *(FMV) is less than Rs 50,000;
• Any property other than immovable property for a consideration where FMV does not exceeds consideration by Rs 50,000;

However, section 56(2)(x) provides that this section shall not apply to any sum of money or any property received from any relative.