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Thursday, October 8, 2009

Get affidavit for gift over Rs 50,000 from kin

From now on, when you get gift-in-kind valued at more than Rs 50,000 from your parents or other relatives, make sure you have a sworn affidavit declaring the donor as your kin.The Central Board of Direct Taxes (CBDT) has recently ruled that any "gift-in-kind" exceeding Rs 50,000 would be taxable at the hands of the donee 'except' from relatives or given during occasions like marriage or by way of inheritance of the donee."The donee has to get an affidavit affirming the donor to be his mother, father, brother, sister or any other relative so that at the time of claiming the exemption under the new arrangement, the income tax assessment officer can have an on-spot verification without any delay," a senior I-T official said.

An individual can preferably get one affidavit listing all such gifts in the entire assessment year from different or the same relative. The individual will hence reduce the trouble of preparing an affidavit each time he receives a gift, the official said.

During the assessment of the I-T returns, the affidavit will save you from the hassles of proving the gift, both movable and immovable, being received or inherited from any relative residing in any part of the world. It will also establish the donee's relationship with the donor, the officer said.

The CBDT had on September 30 notified that "with effect from October 1.... Any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs 50,000 will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF), as income from other sources...".

The department will not tax gifts received from a person who is a relative, on the occasion of marriage of the individual (donee), under a will or by way of inheritance, in contemplation of death of the donor, from any local authority as defined in the explanation to section 10(20) of the Act, from any fund or trust established under section 10(23C) of the Act and from any trust or institution registered under section 12AA of the Act, it said.

Assesses will have to file income tax dues on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11.

Under the I-T Act, 1961, a relative is defined as, spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendant and spouse of any of the relatives.

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