Tax treatment of Gifts Received by an Individual or HUF

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The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

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“This document contains the provisions of the Income-tax Act, 2025, as amended by the Finance Act, 2026.”

TAX TREATMENT OF GIFTS RECEIVED BY AN INDIVIDUAL OR HUF

A very common and frequent question running in the mind of taxpayers is the taxability of gifts. In this part, you can gain knowledge about various provisions relating to taxability of gifts received by an individual or a Hindu Undivided Family (HUF), i.e. sum of money or property received by an individual or a HUF without consideration or a case in which the property is acquired for inadequate consideration

From the taxation point of view, a gift can be classified as follows:

1. Any sum of money received without consideration. It can be termed as ‘monetary gift’.

2. Specified movable properties received without consideration. It can be termed as ‘gift of movable property’.

3. Specified movable properties received at a reduced price (i.e. for inadequate consideration). It can be termed as ‘movable property received for less than its fair market value’.

4. Immovable properties received without consideration. It can be termed as ‘gift of immovable property’.

5. Immovable properties acquired at a reduced price (i.e. for inadequate consideration). It can be termed as ‘immovable property received for less than its stamp duty value’.

Tax treatment of monetary gifts received by an individual or Hindu Undivided Family (HUF)

If the following conditions are satisfied, then any sum of money received without consideration (i.e., a monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax:

• Sum of money received without consideration.

• The aggregate value of such sum of money received during the year exceeds Rs. 50,000.

Though the provisions relating to gifts apply to every person, it has been reported that gifts by a resident to a non-resident are claimed to be non-taxable in India, as the income does not accrue or arise in India. To ensure that such gifts made by residents to a non-resident person are subjected to tax in India, the clause (8) under Section 9 of the Income-tax Act provides that any income arising outside India, being money paid without consideration, by a person resident in India to a non-resident or a foreign company shall be deemed to accrue or arise in India.

Cases in which sum of money received without consideration, i.e., monetary gift received by an individual or HUF, is not charged to tax

In the following cases, a monetary gift received by an individual or HUF will not be charged to tax:-

Money received from relatives.

The following persons would be considered as relatives:

A. In case of individuals:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant (maternal as well as paternal) or descendent of the individual;

(f) Any lineal ascendant (maternal as well as paternal) or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

B. In case of HUF - any member thereof.

1. Money received on the occasion of the marriage of the individual.

2. Money received under will/ by way of inheritance.

3. Money received in contemplation of death of the payer or donor.

4. Money received from any local authority as defined in the Schedule III(note 6).

5. Money received from or by any registered Non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h).

6. Money received by way of transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w).

7. Money received by a trust created or established solely for the benefit of an individual's relative.

8. Money received from such class of persons and subject to such conditions, as may be prescribed.

Marriage of the individual is the only occasion when a monetary gift received by him will not be charged to tax

Gift received on the occasion of marriage of the individual is not charged to tax. Apart from marriage, there is no other occasion on which a monetary gift received by an individual is not subject to tax. Hence, monetary gifts received on occasions such as birthdays, anniversaries, etc. will be subject to tax.

Taxability of monetary gifts received from friends

Gifts received from relatives are not charged to tax (Meaning of ‘relative’ has been discussed earlier). A friend is not a ‘relative’ as defined in the above list, and hence, gifts received from friends will be charged to tax (if other criteria of taxing gifts are satisfied).

Monetary gifts received from abroad

If the total value of monetary gifts received during the year by an individual or HUF exceeds Rs. 50,000 and the gifts are not covered by the exceptions discussed earlier, then such gifts, whether received from India or abroad, will be charged to tax.

Once the total value of gifts received during the year exceeds Rs. 50,000, then all gifts are charged to tax

The sum of money received without consideration by an individual or HUF is chargeable to tax if its total value of sum exceeds Rs. 50,000.

The important point to be noted in this regard is the “total value of such sum”. The taxability of the gift is determined by the total value of gifts received during the year, not by individual gifts. Hence, if the total value of gifts received during the year exceeds Rs. 50,000, the total value of all such gifts will be charged to tax (i.e., the total amount of gifts, not the amount in excess of Rs. 50,000).

Illustration

Mr Kumar received the following gifts during the tax year 2026-27:

• Rs. 1,84,000 from his friend residing in Canada.

• Rs. 25,200 from his elder brother residing in Delhi.

• Rs. 84,000 from his friend residing in Delhi (received on the occasion of Mr Kumar's birthday).

What will be the tax treatment of the above items in Mr Kumar’s hands?

Sum of money received without consideration (i.e. gift) by an Individual or a HUF from any person other than a relative (meaning of relative is already discussed earlier) and otherwise than on prescribed occasions (as discussed earlier) is charged to tax, if the total value of such gift received during the year exceeds Rs. 50,000.

Considering these provisions, the tax treatment of gifts in the hands of Mr Kumar will be as follows:

• Rs. 1,84,000 received from his friend will be fully taxed because the friend is not covered in the definition of ‘relative’.

• Rs. 25,200 received from elder brother will not be charged to tax because elder brother is covered in the definition of ‘relative’.

• Birthday is not covered in the list of prescribed occasion on which gift is not charged to tax, hence Rs.84,000 received on the occasion of birthday will be fully taxed.

Illustration

During the tax year 2026-27, Mr Raja received the following gifts from his friends:

• Rs. 25,000 on 1-5-2026

• Rs. 18,000 on 20-12-2026

What will be the tax treatment of the above gifts?

Sum of money received without consideration (i.e. gift) by an Individual or a HUF from any person other than a relative (meaning of relative has been discussed earlier) and otherwise than on prescribed occasions (as discussed earlier) is charged to tax, if the total amount of such gift received during the year exceeds Rs. 50,000.

Friends are not covered in the definition of relative. Further, birthday is not covered in the list of prescribed occasions on which a gift is not charged to tax; hence, a gift received from friends will be charged to tax. However, nothing will be charged to tax if the aggregate amount of gift received during the year does not exceed Rs. 50,000.

The aggregate amount of gift received by Mr. Raja during the year amounts to Rs. 43,000 (Rs. 25,000 + Rs. 18,000) which is below Rs. 50,000, hence, nothing will be charged to tax in the hands of Mr. Raja.

Suppose that, in the given case, the amount of the second gift is Rs. 28,000 instead of Rs. 18,000; then the aggregate amount of the gifts will be Rs. 53,000 (Rs. 25,000 + Rs. 28,000). In this case, the entire amount of Rs. 53,000 will be charged to tax in the hands of Mr Raja.

Tax treatment of immovable property received as gift by an individual or HUF

If the following conditions are satisfied, then immovable property received without consideration by an individual or HUF will be charged to tax:

1. Immovable property, being land, buildings, or both, is received by an individual/HUF.

2. The stamp duty value of such immovable property received without consideration exceeds Rs. 50,000.

When immovable property received by an individual or HUF without consideration (i.e. by way of gift) is not charged to tax

In the following cases, gift of immovable property will not be charged to tax:

1. Received from relatives

The following persons would be considered as relatives:

A. In case of individuals:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant (maternal as well as paternal) or descendent of the individual;

(f) Any lineal ascendant (maternal as well as paternal) or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

B. In case of HUF - any member thereof.

1. Received on the occasion of the marriage of the individual.

2. Received under will/ by way of inheritance.

3. Received in contemplation of death of the payer or donor.

4. Received from any local authority as defined in the Schedule III (note 6).

5. Received from or by any registered non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h).

6. Received by way of transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w).

7. Received by a trust created or established solely for the benefit of an individual's relative.

8. Received from such class of persons and subject to such conditions, as may be prescribed.

Marriage of an individual is the only occasion when a gift received by him will not be charged to tax

Gift (i.e. immovable property received without consideration) received only on the occasion of marriage of the individual is not charged to tax. Apart from marriage, there is no other occasion when a gift received by an individual is not chargeable to tax. Hence, immovable property received on occasions like birthday, anniversary, etc., without any consideration will be charged to tax.

Taxability of immovable property received without consideration, i.e., gift from friends

Gifts (i.e. immovable property received without consideration) received from relatives are not charged to tax (meaning of relative has been discussed earlier). A friend is not a relative as defined in the above list; hence, a gift received from a friend will be subject to tax (if other criteria for taxing a gift are satisfied).

Tax treatment of gift of immovable property located abroad

If the conditions discussed in the earlier part (regarding the taxability of a gift of immovable property) are satisfied, a gift of immovable property will be subject to tax whether the property is located in India or abroad.

Illustration

An Individual received a gift of a flat from his friend. The stamp duty value of the flat is Rs. 84,000. In this case, whether the total value of the gifted property will be charged to tax or only the value in excess of Rs. 50,000 will be charged to tax?

If the conditions discussed in the earlier part (regarding the taxability of the gift of immovable property) are satisfied, the entire stamp duty value of immovable property received without consideration, i.e., as a gift, will be charged to tax. Once taxability is attracted, i.e., the stamp duty value of the property received as a gift exceeds Rs. 50,000, the entire stamp duty value of the property is chargeable to tax. Hence, in this case, the entire stamp duty value of the property, i.e., Rs. 84,000, will be charged to tax.

Illustration

On 1-5-2026, Mr Kumar gifted his house to his friend Mr Raja. The market value of the building was Rs. 8,40,000, and the value adopted by the Stamp Valuation Authority for charging stamp duty was Rs. 9,00,000. Advise Mr Raja regarding the tax treatment in this case.

If the following conditions are satisfied, then immovable property received by an individual or HUF will be charged to tax:

1. Immovable property, being land or building or both, is received by an individual/HUF.

2. The stamp duty value of such immovable property received without consideration exceeds Rs. 50,000.

The above provisions are not applicable in case of immovable property received from relatives and immovable property received on certain specified occasions.

In the given case, the property is a capital asset for Mr Raja. The property is received from his friend (friend is not covered in the definition of relative). The property is not received on any specified occasion, and the stamp duty value of the property exceeds Rs. 50,000. In other words, all the conditions required to tax the gift are satisfied, and hence the stamp duty value of the property, i.e. Rs. 9,00,000, will be charged to tax in the hands of Mr Raja. It will be charged to tax under the head “Income from other sources”.

Taxability in a case where an immovable property is received for less than its stamp duty value

Apart from taxing immovable property received without consideration, i.e., as a gift, the Income-tax Act also provides for taxing immovable property received for less than its stamp duty value. If the following conditions are satisfied, then immovable property received by an individual or HUF for less than its stamp duty value will be charged to tax:

1. Any immovable property is acquired by an individual or an HUF.

2. Such property is acquired for a consideration, but the consideration is less than the stamp duty value, and the difference exceeds the higher of

• Rs. 50,000 or

• 10% of the consideration.

When immovable property received by an individual or HUF for less than its stamp duty value is not charged to tax

In the following cases, nothing will be charged to tax in respect of immovable property received for less than its stamp duty value:

a. Received from relatives

The following persons would be considered as relatives:

In case of individuals:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant (maternal as well as paternal) or descendent of the individual;

(f) Any lineal ascendant (maternal as well as paternal) or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

In case of HUF - any member thereof.

(a) Received on the occasion of the marriage of the individual.

(b) Received under will/ by way of inheritance.

(d) Received from any local authority as defined in the Schedule III (note 6).

(e) Received from or by any registered non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h).

(f) Received by way of transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w).

(g) Received by a trust created or established solely for the benefit of an individual's relative.

(h) Received from such class of persons and subject to such conditions, as may be prescribed.

Illustration

On 1-4-2026, Mr Raja (a salaried employee) purchased a building from Mr Kumar for Rs. 25,20,000. The value of the building, as adopted by the Stamp Valuation Authority for stamp duty purposes, was Rs. 28,00,000. Advise Mr Raja regarding the tax treatment in this case.

If an individual purchases a capital asset, being an immovable property, and the stamp duty value of such property exceeds actual consideration by higher of Rs. 50,000 or 10% of the actual consideration, then the excess of stamp duty value over the purchase price will be charged to tax in the hands of the purchaser.

In the instant case, the building is a capital asset for Mr Kumar. The stamp duty value of the building exceeds the actual consideration by Rs. 2,80,000, which is higher than Rs. 50,000 or 10% of the actual consideration of Rs. 25,20,000, i.e., Rs. 2,52,000. Hence, the above-discussed provision shall apply, and the differential amount of Rs. 2,80,000 (Rs. 28,00,000 less Rs. 25,20,000) will be treated as income of Mr Kumar.

Illustration

On 1-4-2026, Mr Kumar (a salaried employee) purchased a building from Mr Vipul for Rs. 25,40,000. The value of the building, as adopted by the Stamp Valuation Authority for stamp duty purposes, was Rs. 25,50,000. Advise Mr Kumar regarding the tax treatment in this case.

If an individual purchases a capital asset, being an immovable property, and the stamp duty value of such property exceeds the actual consideration by the higher of Rs. 50,000 or 10% of the actual consideration, then the excess of stamp duty value over the purchase price will be charged to tax in the hands of the purchaser.

In the instant case, the building is a capital asset for Mr Kumar. Though the stamp duty value of the building exceeds the actual consideration by Rs. 10,000, it does not exceed Rs. 50,000 or 10% of the actual consideration of Rs. 25,40,000, i.e., Rs. 2,54,000.

Hence, the above-discussed provision shall not apply, and the differential amount of Rs. 10,000 (Rs. 25,50,000 less Rs. 25,40,000) will not be treated as income of Mr Kumar.

Tax treatment of movable property received as gift by an individual or HUF

If the following conditions are satisfied, then the value of prescribed movable property (meaning discussed in later part) received by an individual or HUF will be charged to tax:

1. Prescribed movable property is received without consideration (i.e., received as gift).

2. The aggregate fair market value of such property received by the taxpayer during the year exceeds Rs. 50,000.

In the above case, the fair market value of the prescribed movable property will be treated as the receiver's income.

Prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures, or any work of art, and bullion, and includes Virtual Digital Asset (VDA).

Considering the above definition, nothing will be charged to tax in respect of a gift of any item being movable property other than covered in the above definition, e.g., Nothing will be charged to tax in respect of a television set received as a gift, because a television set is not covered in the definition of prescribed movable property.

When prescribed movable property is received without consideration, i.e., received as a gift by an individual or HUF, not charged to tax

In the following cases, nothing will be charged to tax in respect of prescribed movable property received without consideration if:

A. Received from relatives

The following persons would be considered as relatives:

In case of individuals:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant (maternal as well as paternal) or descendent of the individual;

(f) Any lineal ascendant (maternal as well as paternal) or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

In case of HUF - any member thereof.

(a) Received on the occasion of the marriage of the individual.

(b) Received under will/ by way of inheritance.

(d) Received from any local authority as defined in the Schedule III (note 6).

(e) Received from or by any registered non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h).

(f) Received by way of transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w).

(g) Received by a trust created or established solely for the benefit of an individual's relative.

(h) Received from such class of persons and subject to such conditions, as may be prescribed.

Illustration

During the tax year 2026-27, Mr. Raja received the following gifts from his friends/relatives:

• Shares received from his father; the fair market value(i.e. value as per the stock exchange) of the shares on the date of gift was Rs. 2,84,000.

• Jewellery received from his friend: the fair market value of the jewellery is Rs. 84,000.

• Jewellery received from his friends and relatives on the occasion of his marriage; the fair market value of jewellery is Rs. 2,52,000.

• Advise Mr Raja regarding the tax treatment of the above gifts.

If the following conditions are satisfied, then the value of prescribed movable property (meaning has been discussed earlier) received by an individual or HUF will be charged to tax:

1. Prescribed movable property is received without consideration (i.e., received as gift).

2. The aggregate fair market value of such property received by the taxpayer during the year exceeds Rs. 50,000.

In the above case, the fair market value of the prescribed movable property will be treated as income of the receiver.

The discussed provisions are not applicable in case of prescribed movable property received from relatives and received on certain specified occasions.

Considering the above provisions, the tax treatment of various items received by Mr. Raja will be as follows:

1. Nothing will be charged to tax in respect of shares received from his father, since his father comes under the definition of the term ‘relative’.

2. Friend is not covered in the definition of relative and hence, in respect of jewellery received from his friend, the fair market value, i.e., Rs. 84,000, will be charged to tax in the hands of Mr Raja.

3. Marriage is covered in the list of specified occasions, and hence, nothing will be charged to tax in respect of jewellery received from his friends and relatives on the occasion of his marriage.

Illustration

An individual received a gift of jewellery from his friends. The total value of jewellery received during the year as a gift from all the friends amounted to Rs. 84,000. What will be the tax treatment of gift in this case?

If the aggregate fair market value of prescribed movable property received by an individual or HUF without consideration during the year exceeds Rs. 50,000, then the total value of such properties received during the year without consideration will be charged to tax. In this case, the total value of jewellery received during the year exceeds Rs. 50,000 and hence, Rs. 84,000 will be charged to tax.

Taxability when prescribed movable property is received by an individual or HUF for less than its fair market value

If the following conditions are satisfied, then prescribed movable property (meaning has been discussed earlier) received by an individual or HUF will be charged to tax:

1. Prescribed movable property is acquired by an individual or HUF.

2. The aggregate fair market value of such properties acquired by the taxpayer during the year exceeds the consideration paid for these properties by Rs. 50,000. In other words, the aggregate fair market value of all such properties exceeds the consideration paid, and the difference is more than Rs. 50,000.

Considering the definition of prescribed movable property (as discussed earlier), nothing will be charged to tax in respect of a gift of any item that is movable property not covered by the above definition. e.g., Nothing will be charged to tax in respect of a television set received as a gift because a television set is not covered in the definition of prescribed movable property.

When prescribed movable property received for less than its fair market value by an individual or HUF, is not charged to tax

In the following cases, nothing will be charged to tax in respect of prescribed movable property received for less than its fair market value if such movable property:

A. Received from relatives

The following persons would be considered as relatives:

In case of individuals:

(a) Spouse of the individual;

(b) Brother or sister of the individual;

(d) Brother or sister of either of the parents of the individual;

(e) Any lineal ascendant (maternal as well as paternal) or descendent of the individual;

(f) Any lineal ascendant (maternal as well as paternal) or descendent of the spouse of the individual;

(g) Spouse of the persons referred to in (b) to (f).

In case of HUF - any member thereof.

(a) Received on the occasion of the marriage of the individual.

(b) Received under will/ by way of inheritance.

(d) Received from any local authority as defined in the Schedule III (note 6).

(e) Received from or by any registered non-profit organisation as defined in section 355(g), except when received by any person referred to in section 355(h).

(f) Received by way of transaction not regarded as transfer under section 70(1)(a), (c), (d), (e), (f), (g), (i), (j), (k), (l), (n), (o), (t), (u), (v) or (w).

(g) Received by a trust created or established solely for the benefit of an individual's relative.

(h) Received from such class of persons and subject to such conditions, as may be prescribed.

Illustration

During the tax year 2026-27, Mr. Raja purchased the following capital assets:

1. Gold jewellery purchased for Rs. 1,84,000, the fair market value of gold jewellery is Rs. 2,84,000.

2. Bullion purchased for Rs. 5,50,000, the fair market value of the bullion is Rs. 6,00,000.

3. Motor car purchased for Rs. 1,52,000, the fair market value of car is Rs. 2,52,000. Advice him regarding the tax treatment of above items acquired by him.

Any prescribed movable property (meaning has been discussed earlier) acquired for less than its fair market value by an individual/HUF is charged to tax if the following conditions are satisfied:

1. Prescribed movable property is acquired by an individual or HUF.

The above-discussed provisions are not applicable in case of prescribed movable property received from relatives and received on certain specified occasions.

Considering the above provisions, the tax treatment of various items acquired by Mr Raja will be as follows:

• Gold jewellery and bullion are covered in the definition of specified movable property. The fair market value of gold jewellery is Rs. 2,84,000 and of bullion is Rs.6,00,000. The purchase price of gold jewellery is Rs.1,84,000 and that of bullion is Rs. 5,50,000. It can be observed that both the properties are acquired for less than its fair market value.

The excess of fair market value over the purchase price will amount to Rs. 1,50,000 (Rs. 1,00,000 for gold jewellery and Rs. 50,000 for bullion) which is more than Rs. 50,000. Hence, the entire excess of fair market value over purchase price i.e. Rs. 1,50,000 will be charged to tax in the hands of Mr. Raja. It will be charged to tax under the head “Income from other sources”.

• Motor car does not come under the definition of prescribed movable property, hence, nothing will be taxed in respect of purchase of motor car.

Illustration

On 1-4-2026, Mr Kumar purchased shares from Mr Raja for Rs. 84,000. The fair market value of the shares, i.e., the value as per the price quoted in the stock exchange, Rs. 1,00,000. Further, on 1-7-2026, he acquired gold jewellery from Mr Rajkumar for Rs. 25,200. The fair market value of jewellery is Rs. 50,400. Mr Kumar is confused regarding the tax consequences arising in respect of the above items purchased by him. Advise him in this regard.

Any prescribed movable property (meaning has been discussed earlier) acquired for less than its fair market value by an individual/a HUF is charged to tax if the following conditions are satisfied:

1. Prescribed movable property is acquired by an individual or HUF.

2. The aggregate fair market value of such properties acquired by the taxpayer during the year exceeds the consideration paid for these properties by Rs. 50,000. In other words, the aggregate fair market value of all such properties is higher than the consideration paid, and the difference is more than Rs. 50,000.

The above provisions are not applicable in case of prescribed movable property received from relatives and received on certain specified occasions.

Considering the above discussed provisions, the tax treatment of various items acquired by Mr. Kumar will be as follows:

• The fair market value of the share is Rs. 1,00,000 and shares are acquired for Rs. 84,000, thus, the excess of fair market value over purchase price will come to Rs.16,000.

• The fair market value of jewellery is Rs. 50,400, and it is acquired for Rs. 25,200; thus, the excess of fair market value over purchase price will come to Rs. 25,200.

The total of the excess of fair market value over purchase price amounts to Rs. 41,200 (Rs. 16,000 for shares + Rs. 25,200 for jewellery), which is below Rs. 50,000 and hence, nothing will be charged to tax in the hands of Mr Kumar.

Suppose, if in the given case, the fair market value of shares is Rs. 1,84,000 instead of Rs. 1,00,000, then the aggregate of excess of fair market value of shares and gold jewellery will amount to Rs. 1,25,200 (Rs. 1,00,000 excess fair market value of shares + Rs. 25,200 excess fair market value of gold jewellery). The excess of fair market value over purchase price exceeds Rs. 50,000 and hence, the entire excess of Rs. 1,25,200 will be charged to tax as income from other sources.

MCQ ON TAX TREATMENT OF GIFTS RECEIVED BY AN INDIVIDUAL OR HUF

Q1. Sum of money received by an individual or HUF without consideration, the aggregate value of which exceeds during the year will be charged to tax.

(a) Rs. 10,000 (b) Rs. 25,000

Correct answer: (c)

Justification of correct answer:

If the following conditions are satisfied, then any sum of money received without consideration (i.e., a monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax:

• Sum of money received without consideration.

• The aggregate value of such sum of money received during the year exceeds Rs. 50,000.

Thus, option (c) is the correct option.

Q2. Sum of money received from brother or sister of the spouse of the individual will not be charged to tax in the hands of the individual.

(a)True (b) False

Correct answer: (a)

Justification of correct answer:

Sum of money received from relatives will not be charged to tax in the hands of an individual or HUF. As per the definition of the relative, brother or sister of the spouse of an individual will be treated as a relative of an individual. Hence, sum of money received from brother or sister of the spouse of the individual will not be charged to tax in the hands of the individual.

Thus, the statement given in the question is true, and hence, option (a) is the correct option.

Q3. Money received by a HUF from its members will be charged to tax in the hands of the HUF since members cannot be treated as relatives of a HUF.

(a) True (b) False

Correct answer: (b)

Justification of correct answer:

As per the definition of relatives, members of HUF will be treated as relatives of the HUF and money received from relatives will not be charged to tax. Hence, money received by a HUF from its members will not be charged to tax in the hands of HUF.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q4. If the aggregate value of money gifts received during the year exceeds Rs. 50,000, then received during the year will be charged to tax.

1. Value of gifts in excess of Rs. 50,000

2. Value of gifts up to Rs. 50,000

3. Total value of all such gifts

4. Value of gifts up to Rs. 25,000

Correct answer: (c)

Justification of correct answer:

If the aggregate value of money gifts received during the year exceeds Rs. 50,000, then the total value of all such gifts received during the year will be charged to tax (i.e. the total amount of gift and not the amount in excess of Rs. 50,000).

Thus, option (c) is the correct option.

Q5. The stamp duty value of immovable property received by an individual without consideration (i.e., as a gift) will be charged to tax if the same will exceed _.

(a) Rs. 5,000 (b)Rs. 25,000

Correct answer: (c)

Justification of correct answer:

If the following conditions are satisfied then immovable property received without consideration by an individual or HUF will be charged to tax:

1. Immovable property, being land or building or both, is received by an individual/HUF.

2) The stamp duty value of such immovable property received without consideration exceeds Rs. 50,000.

Thus, option (c) is the correct option.

Q6. Immovable property received without consideration by an individual on the occasion of his/her marriage will always be charged to tax in the hands of the individual.

(a) True (b) False

Correct answer: (b)

Justification of correct answer:

Gift received on the occasion of marriage of the individual is not charged to tax.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q7. If an immovable property is acquired by an individual for a consideration which is less than the stamp duty value and the difference exceeds Rs. 50,000, or 10% of the actual consideration, then the excess of stamp duty value over the purchase price of the property will be treated as income of the seller.

a) True (b) False

Correct answer: (b)

Justification of correct answer:

If an immovable property is acquired by an individual for a consideration which is less than the stamp duty value and the difference exceeds Rs. 50,000, or 10% of the actual consideration, then the excess of stamp duty value over the purchase price of the property will be treated as income of the purchaser and not of the seller.

Thus, the statement given in the question is false, and hence, option (b) is the correct option.

Q8. Gift of motor car (fair market value is Rs. 84,000) received by an individual from his friends will be charged to tax since the fair market value exceeds Rs. 50,000.

(a) True (b) False

Correct answer: (b)

Justification of correct answer:

Motor car is not covered in the definition of prescribed movableA property. Hence, nothing will be charged to tax in case of a gift of a motor car received by an individual from his friends even though the fair market value exceeds Rs. 50,000.

Thus, the statement given in the question is false, and hence, option (b) is the correct option.

Q9. If the aggregate fair market value of prescribed movable property received by the taxpayer during the year exceeds Rs. 50,000, then will be charged to tax.

1. Fair market value up to Rs. 50,000

2. Fair market value in excess of Rs. 50,000

3. Entire fair market value

4. Fair market value up to Rs. 25,000

Correct answer: (c)

Justification of correct answer:

If the aggregate fair market value of prescribed movable property received by the taxpayer during the year exceeds Rs. 50,000, then the entire fair market value will be charged to tax.

Thus, option (c) is the correct option.

Q10. Gift of movable property received from a local authority [as defined under Schedule III, Table: Sl. No. 22 of the Income-tax Act] will always be charged

(a) True

Correct answer: (b)

Justification of correct answer:

(b) False

Gift of movable property received from a local authority [as defined in Schedule III, Note 6 of the Income-tax Act] will never be charged to tax in the hands of an individual or a HUF.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Tax treatment of Gifts Received by an Individual or HUF

Footnotes