This means that if any gift is received, say, from a charity trust by a meritorious student for higher studies of, say, ` 4 Lakh then such amount would be exempted from being taxed as income as per Section 56. Similarly, if any help is received from some trust, etc. for medical treatment, say of 2 lath then also it would be tax exempt. However, this benefit would not be available on grant for education or medical help if received from an institution from abroad because the same is not covered in the exemption clause; the exemption only is for trusts or institutions mentioned in Section 10 (23 C) or Section 1 2AA of the Income-tax Act, 1961.
As per the Finance (No. 2) Act, 2009 Section 56 has been amended from 1- 10-2009 to provide that the value of any property received without consideration will also be included in the computation of total income of the recipient. Such properties will include immovable property being land or building or both, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art.
As per the Finance Act, 2010, “Bullion” would also be included in income from other sources if received from a non-relative and if it exceeds ` 50,000 in a year.
In a case where an immovable property is received without consideration and the stamp duty value of such property exceeds fifty thousand rupees (`50,000), the whole of the stamp duty value of such property shall be taxed as the income of the recipient.
If an immovable property is received for a consideration which is less than the stamp duty value of the property and the difference between the two exceeds ` 50,000 (fifty thousand rupees) (inadequate consideration), the difference between the stamp duty value of such property and such consideration shall be taxed as the income of the recipient.
In a case where movable property is received without consideration and the aggregate fair market value of such property exceeds fifty thousand rupees (` 50,000), the whole of the aggregate fair market value of such property shall be taxed as the income of the recipient.
It is also provided that:
(i) The value of movable property shall be the fair market value as on the date of receipt in accordance with the method prescribed; and
(ii) In the case of immovable property, the value of the property shall be the “stamp duty value” of the property.
The above provisions are applicable with effect from 1st October, 2009 and will accordingly apply for transactions undertaken on or after such date.
It is further provided by the Finance (No. 2) Act, 2009 that when the capital gain arises from the transfer of a property as mentioned in the above paragraph then for the purpose of capital gain the cost of acquisition of such property shall be deemed to be the value which was taken for the above purpose of Section 56.
Gifts received from specified relatives, however, continue to be exempt from tax. Accordingly, the following sums shall not be included in the taxable income
(a) The sum received by, or credited in the account of: (i) any individual from a relative out of natural love and affection, or (ii) any individual or Hindu undivided, family under a Will or by way of inheritance, or (iii) any employee or the dependent of the deceased employee from an employer, by way of bonus, gratuity or pension or insurance or any such other sum solely in recognition of the services rendered by the employee, or
(b) Any sum received in contemplation of death of an individual or karta or member of a Hindu undivided family, or
(c) Any income referred to in Section 10 of the Income Tax Act or any other income which is exempt or not included in the total income under the Act or
(d) any sum received on account of transfer referred to in Section 47 under Income Tax Act.
As per the Finance Bifi, 2012 in the case of a Hindu Undivided Family amount received from any member of the HUF would not be taxable.
The definition of “relative” for the purpose of this provision is as under:
(i) spouse of the individual,
(ii) brother or sister of the individual,
(iii) brother or sister of the spouse of the individual,
(iv) brother or sister of either of the parents of the individuals,
(v) any lineal ascendant or descendant of the individuals,
(vi) any lineal ascendant or descendant of the spouse of the individual, and (vii) spouse of a person referred to in items (ii) to (vi) mentioned above.