Gift Tax

Definitions

2. In this Act, unless the context otherwise requires,—

1. “Appellate Tribunal” means the Appellate Tribunal constituted under section 252 of the Income-tax Act;
2. “assessee” means a person by whom gift-tax or any other sum of money is payable under this Act, and includes—
   1. every person in respect of whom any proceeding under this Act has been taken for the determination of gift-tax payable by him or by any other person or the amount of refund due to him or such other person;
   2. every person who is deemed to be an assessee under this Act;
   3. every person who is deemed to be an assessee in default under this Act;
3. “Assessing Officer” means the Assistant Commissioner  [or Deputy Commissioner] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of the Income-tax Act which apply for the purposes of gift-tax under section 7 of this Act, and also the [Joint] Commissioner who is directed under clause (b) of sub-section (4) of the said section 120 to exercise or perform all or any of the powers and functions conferred on or assigned to the Assessing Officer under that Act;
4. “assessment” includes reassessment;
5. “assessment year” means the period of twelve months commencing on the 1st day of April every year;
6. “Board” means the [Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)];

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Charge of gift-tax.

3. (1) Subject to the other provisions contained in this Act, there shall be charged for every [assessment] year commencing on and from the 1st day of April, 1958, [but before the 1st day of April, 1987,] a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by a person during the previous year (other than gifts made before the 1st day of April, 1957), at the rate or rates specified in [Schedule I].

(2) Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April, 1987, gift-tax in respect of the gifts, if any, made by a person during the previous year, at the rate of thirty per cent on the value of all taxable gifts.

(3) Notwithstanding anything contained in sub-section (2), the provisions of this Act shall cease to apply and shall have no effect whatsover in respect of any gift made on or after the 1st day of October, 1998.
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Gifts to include certain transfers.

4. (1)For the purposes of this Act,—

1. where property is transferred otherwise than for adequate considera-tion, the amount by which the [value of the property as on the date of the transfer and determined in the manner laid down in Schedule II, exceeds the value of the consideration shall be deemed to be a gift made by the transferor :
   [Provided that nothing contained in this clause shall apply in any case where the property is transferred to the Government or where the value of the consideration for the transfer is determined or approved by the Central Government or the Reserve Bank of India;]
2. where property is transferred for a consideration which, having regard to the circumstances of the case, has not passed or is not intended to pass either in full or in part from the transferee to the transferor, the amount of the consideration which has not passed or is not intended to pass shall be deemed to be a gift made by the transferor;
3. where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contract or other actionable claim or of any interest in property by any person, the value of the release, discharge, surrender, forfeiture or abandonment to the extent to which it has not been found to the satisfaction of the [Assessing Officer] to have been bona fide, shall be deemed to be a gift made by the person responsible for the release, discharge, surrender, forfeiture or abandonment;
4. where a person absolutely entitled to property causes or has caused the same to be vested in whatever manner in himself and any other person jointly without adequate consideration and such other person makes an appropriation from or out of the said property, the amount of the appropriation used for the benefit of the person making the appropriation or for the benefit of any other person shall be deemed to be a gift made in his favour by the person who causes or has caused the property to be so vested;
5. where a person who has an interest in property as a tenant for a term or for life or a remainderman surrenders or relinquishes his interest in the property or otherwise allows his interest to be terminated without consideration or for a consideration which is not adequate, the value of the interest so surrendered, relinquished or allowed to be terminated or, as the case may be, the amount by which such value exceeds the consideration received, shall be deemed to be a gift made by such person.

(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family (such property being hereafter in this sub-section referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, for the purpose of computation of the taxable gifts made by the individual, the individual shall be deemed to have made a gift of so much of the converted property as the members of the Hindu undivided family other than such individual would be entitled to, if a partition of the converted property had taken place immediately after such conversion.

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Exemption in respect of certain gifts.

1. Gift-tax shall not be charged under this Act in respect of gifts made by any person—
   1. of immovable property situate outside the territories to which this Act extends;
   2. of movable property situate outside the said territories unless the person—
   3. of property in the form of savings certificates issued by the Central Government, which that Government, by notification in the Official Gazette exempts from gift-tax;
2. Without prejudice to the provisions contained in sub-section (1), gift-tax shall not be charged under this Act in respect of gifts made by any person during the previous year, subject to a maximum of rupees [thirty] thousand in value.
3. Explanation.—For the purposes of this section,—
   1. an individual shall be deemed to be ordinarily resident in the terri- tories to which this Act extends during the previous year in which the gift is made if during that year he is regarded as a resident but not as not ordinarily resident [within the meaning of section 6 of the Income-tax Act, subject to the modification that references in that section to India shall be construed as references to the territories to which this Act extends] ;
   2. a Hindu undivided family, firm or other association of persons shall be deemed to be resident in the territories to which this Act extends during any previous year unless, during that year, the control and management of its affairs was situated wholly outside the said territories ;
   3. a company shall be deemed to be resident in the territories to which this Act extends during the previous year
   4. “gifts made in contemplation of death” has the same meaning as in section 191 of the Indian Succession Act, 1925 (39 of 1925)

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Value of gifts, how determined.

6. (1) Subject to the provisions of sub-section (2), the value of any property, other than cash, transferred by way of gift shall, for the purpose of this Act, be its value as on the date on which the gift was made and shall be determined in the manner laid down in Schedule II.

(2) Where a person makes a gift which is not revocable for a specified period, the value of the property gifted shall be the capitalised value of the income from such property during the period for which the gift is not revocable.

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Aggregation of gifts made during a certain period.

6A. Omitted by the Finance Act, 1986, w.e.f. 1-4-1987. Section 6A was inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-1976. Original section was introduced by the Finance Act, 1964, w.e.f. 1-4-1964 and was later omitted by the Finance Act, 1966, w.e.f. 1-4-1966.

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Gift-tax authorities and their jurisdiction.

7. The income-tax authorities specified in section 116 of the Income-tax Act shall be the gift-tax authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a gift-tax authority under this Act in respect of any person within his jurisdiction, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of that Act.

Explanation.—For the purposes of this section, the gift-tax authority having jurisdiction in relation to a person who has no income assessable to income-tax under the Income-tax Act shall be the gift-tax authority having jurisdiction in respect of the area in which that person resides.

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Powers of Commissioner respecting specified areas, cases, persons, etc.

1. Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. Prior to its omission it was substituted by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1-10-1984. Original section was inserted by the Gift-tax (Amendment) Act, 1962, w.e.f. 1-4-1963, which was later on substituted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. At relevant time, it stood as under
   1. the powers conferred on the Gift-tax Officer by or under this Act shall, in respect of any specified case or class of cases or of any specified person or class of persons, be exercised by the Inspecting Assistant Commissioner;
   2. such of the functions assigned to the Gift-tax Officer by or under this Act, as are specified in any such order may, in respect of any specified area or specified cases or classes of cases or specified persons or classes of persons, be performed by an Inspector of Gift-tax or any member of the ministerial staff appointed to work under the Commissioner or any other gift-tax authority subordinate to him, and specified in such order, subject to such conditions, restrictions or limitations as may be specified therein :
      Provided that the Commissioner shall not, unless he is authorised in this behalf by the Board by general or special order in writing, make an order under clause (b) in relation to the functions of a Gift-tax Officer mentioned in the following provisions of this Act, namely, sections 15, 16, 17, 19A, 20, 21, 21A, 23, 32, 33 and 36.
2. For the purposes of any case or person or proceeding under this Act in respect of which or whom an order under sub-section (1) applies,—
   1. where such order is made under clause (a) of the said sub-section, references in this Act or in any rule made thereunder to the Gift-tax Officer shall be deemed to be references to the Inspecting Assistant Commissioner and any provision of this Act requiring approval or sanction of the Inspecting Assistant Commissioner shall not apply ;
   2. where such order is made under clause (b) of the said sub-section, references in this Act or in any rule made thereunder to the Gift-tax Officer shall be deemed to include references to the Inspector of Gift-tax or the member of the ministerial staff specified in such order.”

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