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Taxability of Gifts - Section 56(2)(x) - Introduction

# Section 56(2)(x) — Taxability of Gifts (Money or Property): Introduction

## Applicability

Applies to All Persons (Individual, HUF, firm, company, AOP, etc.).

## Concept — Categories of "Gift"

A gift can fall into one of three buckets:

  • Money (cash / cheque / electronic transfer)
  • Movable Property — received either (a) without consideration, or (b) for inadequate consideration
  • Immovable Property — received either (a) without consideration, or (b) for inadequate consideration

## Trigger

If during a P.Y., aggregate of money / property received without consideration or for inadequate consideration exceeds ₹ 50,000 → taxable under IFOS.

## Outline of Taxability (Detailed in Next Section)

TypeTriggering ThresholdTaxable Amount
MoneyAggregate > ₹ 50,000Whole amount
Movable Property (without consideration)Aggregate FMV > ₹ 50,000Aggregate FMV
Movable Property (inadequate consideration)(FMV − Consideration) > ₹ 50,000FMV − Consideration
Immovable Property (without consideration)Stamp Duty Value (SDV) > ₹ 50,000SDV
Immovable Property (inadequate consideration)(SDV − Consideration) > Higher of ₹ 50,000 or 10% of considerationSDV − Consideration

## Important

The ₹ 50,000 threshold acts as an all-or-nothing trigger for money and movable property — once breached, the entire amount is taxable (not just the excess).

## Common Exclusions (Detailed in Next Section)

Gifts received from: relatives; on marriage of individual; under will/inheritance; in contemplation of death; from local authority/specified funds — are NOT taxable.

Worked example

### Example 1

Example 1 — Money: Mr. X received ₹ 60,000 from a friend on his birthday. Aggregate money > ₹ 50,000 → Entire ₹ 60,000 taxable under IFOS.

### Example 2

Example 2 — Money below threshold: Mr. X received ₹ 40,000 cash gift from a friend. Aggregate ≤ ₹ 50,000 → Fully Exempt (not taxable).

### Example 3

Example 3 — Movable Property: Mr. X received a painting (FMV ₹ 70,000) from a friend without consideration. FMV > ₹ 50,000 → Entire ₹ 70,000 taxable.

⚠️ Common exam mistakes

  • Taxing only the excess over ₹ 50,000 — entire amount is taxable once threshold is crossed.
  • Forgetting that gifts from "relatives" are wholly exempt (irrespective of amount).
  • Treating immovable property the same as movable — immovable has its own 10% safe-harbour and different threshold.
  • Limiting Section 56(2)(x) to individuals — it applies to all persons.
Bare-Act text Section 56(2)(x) · Income Tax Act, 1961 · click to expand
Section 56(2)(x): Where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017 — (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; (b) any immovable property without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; or for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of fifty thousand rupees and ten per cent of the consideration; (c) any property, other than immovable property — similar provisions apply to movable property.
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