Gifting movable, immovable properties or cash through Gift Deed this Diwali? Know how they will be taxed
In this weekly series, Dr Suresh Surana, Founder, RSM India, a tax consultancy firm, explains the taxation of various kinds of gifts shared through Gift Deeds.
A Gift deed would refer to a legal document by way of which the Donor of immovable or movable property transfers his/her property to the Donee as a gift. The taxation of gifts has to be examined from the perspective of the donor (i.e. the giver of the gift) as well as the donee (recipient of the gift). There is a specific exemption provided under section 47 of the Income Tax Act ( ‘IT Act’) to the donor of a gift. Also, from the recipient’s perspective in certain cases, there is an exemption on taxation in the hands of receipt by individuals from ‘close relatives’, at the time of marriage, by way of inheritance, etc.
Subject to the above provisions mentioned in brief, the tax implications for gifts would be as follows:-
The taxation aspects of gifting a movable property from the perspective of the donor (i.e. the giver of the gift) is as discussed above i.e. it would be exempt under section 47 of the IT Act. However, the taxation in the hands of the Donee (i.e. recipient) of movable property is as under:
Where the movable property is gifted without consideration, the entire Fair market value (FMV) of such movable property would be chargeable to tax in the hands of the recipient provided the same exceeds Rs. 50,000.
In case of an immovable property which is gifted for an inadequate consideration i.e. actual consideration is less than the FMV by an amount that exceeds Rs.50,000, then the differential amount between the FMV and the actual consideration shall be chargeable to tax under the head Income from other sources.
It is pertinent to note that the above
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