India is a country of close knitted families and having a lot of reasons to celebrate owing to its diversified culture, customs and religion. Numerous occasions arise where gifts are exchanged. In fact gifting each other is a symbol of love and affection and can also be a symbol of social status. However, many a times gifts can also be a part of tax planning / tax evasion. While tax planning done within the framework of law is permissible, tax evasion is prohibited and can be penalised. The Government introduced gift tax in April 1958 regulated by Gift Tax Act, 1958 (The GTA) with an objective to impose taxes on giving and receiving gifts under certain specific circumstances. Gifts in the form of cash, demand draft, bank cheques or anything having a value were covered. However, the GTA was abolished in October 1998 and made all gifts tax free. But, Gift Tax was reintroduced in a new form and included in the Income tax provisions in 2004. It is highly important to have a basic understanding of taxation on gifts in India to avoid any ignorant /unplanned tax outflow.

1. Gift taxation in India

As per the law as it stands today which was amended in 2017, gift received by any person by any person or persons are taxed in the hands of recipient under the head ‘Income from other sources’ at normal tax rates. We have discussed below what kind of gifts are covered and its quantum to be taxed.

2. Provisions relating to Stamp Duty

Provisions relating to considering the stamp duty value is similar to the provisions as per Section 50C.  We have discussed the provision for the purpose of gift tax in brief below: For the purpose of computing gift tax in case of immovable property, stamp duty value is what needs to be considered. However, stamp duty value can be higher due to varied reasons and one of such reason can be considerable time gap between agreement fixing the consideration and date of registration.

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  1. Q6. What are the provisions for estimating the profits and gains of an assesse
    engaged in retail business under section 44AD? Also discuss the provisions of
    section 43B regarding certain expenditure allowed on actual payment basis?

  2. I think this is not complete answer?? Please help


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