Taxability of Gifts (Money & Property) under Section 56(2)(x) as “Income from Other Sources”

1. Applicability

Section 56(2)(x) covers:

• Cash gifts
• Immovable property(land, buildings)
• Movable property(jewelry, shares, artwork, vehicles, etc.)
  received:
• Without consideration (free)
• For inadequate consideration (below FMV)

2. Taxable Scenarios

3. Key Exemptions (Not Taxable)

• From relatives(spouse, siblings, lineal ascendants/descendants)
• On marriage occasions
• Through inheritance/will
• From local authorities/charitable trusts
• COVID-19 medical relief(up to ₹10 lakh)

4. Tax Calculation

• Taxed at normal slab rates
• No separate tax rate(unlike lottery winnings)
• TDS not applicable(recipient must self-declare)

5. Valuation Rules

• Immovable property:Stamp duty value
• Movable property:Fair market value (FMV)
• Shares:FMV = Higher of:
  • Book value
  • Value per share in SEBI guidelines

6. Compliance Requirements

• Reporting in ITR:Schedule OS
• Documentation:
  • Gift deed (for property)
  • Relationship proof (for exempt gifts)
  • Valuation reports (for property)

7. Example Cases

1. Cash Gift:₹60,000 from friend → ₹60,000 taxable
2. Property Gift:Land worth ₹20 lakh received free → ₹20 lakh taxable
3. Wedding Gift:₹2 lakh from uncle → Exempt (marriage)

8. Recent Changes

• Clubbing provisions:Gifts to spouse/minor children may be clubbed
• Digital assets:Crypto/NFT gifts now covered

9. Penalty Risks

• Non-disclosure may attract:
  • Scrutiny notice
  • Penalty up to 50% of tax avoided
  • Interest under Section 234A/B/C

Note: For high-value gifts, maintain proper documentation to prove exemption eligibility. When in doubt, consult a tax professional.