Generally, gifts received are not regarded as Income chargeable to Tax. However, by virtue of section 2(24)(xiii) r.w.s. 56(2)(v), any sum of money exceeding Rs. 25,000 received without consideration by an individual or an HUF from any person after 1-9-2004 is chargeable to tax as Income under the head Other Sources, subject to following exceptions: [(a) Receipts from certain relatives; as defined in the section]. (Refer Chart) [(b) Receipts on occasion of marriage of the individual.] [(c) Receipts under a will or inheritance.] [(d) Receipts in contemplation of death of the payer.]

Sec. 56(2)(v) has been amended by the Taxation Laws (Amendment) Act, 2006 so as to exempt also the receipts from (i) local authority, (ii) institutions exempt u/s. 10(23C); and (iii) trusts/institutions registered u/s. 12AA. The Amendment Act has also inserted new section 56(2)(vi) so as to enhance the exemption limit from Rs. 25,000 to Rs. 50,000 (in aggregate) in respect of gifts received on or after April 1, 2006.

Sec. 56(2) has been further amended and w.e.f. 1-10-2009, the scope of gift is increased by adding immovable property or any property besides sum of money [S. 56(2)(vii)].

Valuation of Gift in case of

(i) Immovable Property

(a) without consideration – if stamp duty value exceeds Rs. 50,000/- stamp duty value

(b) for a consideration which is less than stamp duty value – stamp duty value less consideration.

(ii) Any other property:

(a) without consideration – fair market value exceeds Rs. 50,000/-, fair market of the property

(b) for a consideration – fair market value less consideration.

Notes: (1) Subject to clubbing provisions applicable for Gift received from Spouse and Parent-in-Law.

(2) The individual can receive gifts without attracting tax also from lineal ascendents and decendents of the individual other than those mentioned in the above chart.