Tax on gift (New amendments in budget 2010)

Taxation of Gift:

Taxation on gifts became difficult budget by budget.

Since last two budgets the scenario of gift has changed. Only individual’s and Hindu Undivided Family were covered to pay taxes on gifts received from any other person other than relatives of assessee and if total value of gifts exceeded Rs. 50000 per annum.. Commodities/kinds (Article) gifted to individual or HUF was outside preview of taxes on gift income till 1^st oct. 2009.

Provision up to 1.10.2009:

Taxation on Gift for Individual and HUF:

When an individual or HUF has received any gift in cash (not being in kind), without consideration or adequate consideration, exceeding Rs 50000 in a previous year after 1.4.2006 upto 01.10.2009 from any body, other than relative, is taxable in hand of assessee as income from other source .

Money  received in  following situations is not taxable in hand of assessee:

Ø       From relatives at any occasion

Ø       On occasion of marriage by any person

Ø       Received on event of death of payer

Ø       By way of will, inheritance

Ø       Fund, educational institute, hospital, Local authority, (covered under section 10) & charitable trust section 12

Meaning of relative:

Ø       Spouse,

Ø       Child (Own, Step and legally adopted child of assessee) ,

Ø       Brother’s & Sister’s  own as well as of spouse’s

Ø       Parents Both own &  of  spouse’s

Ø       Brother’s and sister’s of own parents.  

Ø       Linear ascender or descendant of assessee as well as spouse of assessee

Provision from  1.10.2009 to 31.5.2010:

Taxation of Gift for Individual and HUF:

When an individual or HUF has received any gift in cash or kinds, without consideration or inadequate consideration, and value of the gift exceeding Rs 50000 in a previous year from any body, other than relative, is taxable in hand of assessee as income from other source .

Amendments in budget 2010:

Taxation on Gift for Individual and HUF:  as mentioned above..

Taxation on Gifts for company and partnership firm (Introduced):

Where a firm or company (Public are not substantial involved), has received money or article (kinds), shares etc. on and after 1^st June 2009 from any person (individual’s/HUF/Company or any Concern) as gift in cash, share or kind, without consideration or inadequate consideration, and value of the gift exceeding Rs. 50000 in a previous year, such gift is taxable in hand of company under head of income from other source.

Taxability of Gift (After 01.06.2010)
S.No	Gift given by	Gift Received by	Taxability	Nature
1	Individual	Individual	YES	Cash or in Kind
		HUF	YES
		Company	YES
2	HUF	Individual	YES	Cash or in Kind
		HUF	YES
		Company	YES
3	Company	Individual	YES	Cash or in Kind
		HUF	YES
		Company	YES

Taxability of Gift (After 01.10.2009 To 31.05.2010)
S.No	Gift given by	Gift Received by	Taxability	Nature
1	Individual	Individual	YES	Cash or in Kind
		HUF	YES
		Company	N.A
2	HUF	Individual	YES	Cash or in Kind
		HUF	YES
		Company	N.A
3	Company	Individual	YES	Cash or in Kind
		HUF	YES
		Company	N.A