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GIFT TAX ACT, 1958
18 of 1958
An Act to provide for the levy of gift-tax. Be it enacted by Parliament in the Ninth Year of the Republic of India as follows:-
SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT
(1) This Act may be called the Gift-tax Act, 1958.
(2) It extends2to the whole of India except the State of Jammu and Kashmir.
(3) It shall be deemed to have come into force on the 1st day of April, 1958.
SECTION 02: DEFINITIONS
- In this Act, unless the context otherwise requires,-
(i) [Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1988)].
(ii)3["Appellate Tribunal]" means the Appellate Tribunal constituted under section 252 of the Income-tax Act]
4[(iii) "assessee" means a person by whom gift-tax or any other sum of money is payable under this Act and includes -
(a) 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;
(b) every person who is deemed to be an assessee under this Act;
(c) every person who is deemed to be an assessee in default under this Act;
5[(iiia) "Assessing Officer" means the Assistant 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 Deputy Commissioner who is directed under clause (b) of sub-sec. (4) of the said section 120to exercise or perform all or any of the powers and functions conferred on or assigned to the Assessing Officer under that Act;]
(iv) "Assessment" includes reassessment.
(iva) "Assessment year" means the period of twelve months commencing on the 1st day of April every year.]
7[(v) "Board" means the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963.]
8[(va) "charitable purpose" includes relief of the poor, education, medical relief, and advancement of any other object of general public utility not involving the carrying on of any activity for profit;]
(vi) [Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1988)],. (via)
9(vii) the expressions "company", "Indian company" and "company in which the public are substantially interested" shall have the meanings respectively assigned to them under section 2 of the Income-tax Act;]
(vii a) [Omitted by the Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1988)]
(viii) "done" means any person who acquires any property under a gift, and where a gift is made to a trustee for the benefit of another person, includes both the trustee and the beneficiary;
(ix) "donor" means any person who makes a gift;
(x) "executor" means an executor or administrator of the estate of a deceased person;
10[(xi) the expressions "firm", "partner" and "partnership" shall have the meanings respectively assigned to them under S. 2 of the Income-tax Act. ]
(xii) "gift" means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and [includes the transfer or conversion of any property referred to in section 4-, deemed to be a gift under that section.]
[Explanation.- A transfer of any building or part thereof referred to in clause (iii), clause (iiia) or clause (iiib) of section 27 of the Income-tax Act by the person who is deemed under the said clause to be the owner thereof made voluntarily and without consideration in money or money's worth, shall be deemed to be a gift made by such person;]
(xiii) [Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1988)].
(xiv)13["Income-tax Act" means the Indian Income-tax Act, 1961;]
(xv), (xvi) and (xvia) [Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1988).
14[(xvib) "Legal representative" has the meaning assigned to it in clause (II) of section 2 of the Code of Civil Procedure, 1908;]
(xvii) [Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 162 (1-4-1989).
(xviii) "person" includes a Hindu undivided family or a company or an association or a body of individuals or persons, whether incorporated or not;
(xix) "prescribed" means prescribed by rules made under this Act;
(xx) "previous year", in relation to any assessment year -
(a) in the case of an assessee15[having no source of income, profits or gains or] having a source of income, profits or gains in respect of which there is no previous year under the Income-tax Act, means the twelve months ending on the 31st day of March immediately preceding the assessment year;
18 [(b)x x x]
(c) in the case of any other assessee, means the previous year as defined in [section 3] of the Income-tax Actif an assessment were to be made under that Act for that year; 17[Provided that where a person who has not been assessed under this Act for any assessment year makes a gift on a date which does not fall within a previous year as defined in sub-clause (a)18[[x x x x] or sub-clause (c), the previous year shall be the twelve months ending on the 31st day of March immediately preceding the assessment year;
18[x x x]]
(xxi) "principal officer", used with reference to a company or any association of persons, means -
(a) the secretary and treasurer, manager, managing agent, managing director or agent of the company or. association; or
(b) any person connected with the management of the affairs of the company or association upon whom the Gift-tax Officer has served a notice of his intention of treating him as the principal officer thereof;
(xxii) "property" includes any interest in property, movable or immovable;
(xxiii) "taxable gifts" means gifts chargeable to Gift-tax under this Act;
19[(xxiiia) territories to which this Act extends shall be deemed to include the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry -
(a) as respects any period for the purposes of section 5-; and
(b) as respects any period included in the previous year, for the purposes of making
any assessment for the assessment year commencing on the 1st day of April, 1963, or for any subsequent year;]
(xxiv) "transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the generality of the foregoing, includes -
(a) the creation of a trust in property;
(b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property;
(c) the exercise of a power of appointment20[(whether general special or subject to any restrictions as to the persons in whose favour the appointment may be made)] of
property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and
(d) any transaction entered into by any person with intent thereby to diminish directly
or indirectly the value of his own property and to increase the value of the property of any other person;
21[(xxv) the expressions "Chief Commissioner", ``Director General", "Commissioner", "Commissioner (Appeals)", "Director",22[Additional Director of Income-tax", "Additional Commissioner of Income-tax", "Additional Commissioner of Income- tax (Appeals)", Deputy Director,] "Assistant Commissioner", "Income-tax Officer", "Tax Recovery Officer" and "Inspector of Income-tax" shall have the meanings respectively assigned to them under section 2 of the Income -tax Act.]
SECTION 03: CHARGE OF GIFT-TAX
-25[ (1)] Subject to the other provisions contained in this Act, there shall be
charged for every23 [assessment year] commencing on and from the 1st day of April, 1958, 24[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 in26[Schedule 1].
25[(2)27[Subject to the other provisions (including provisions for the levy of additional gift-tax) 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."]
SECTION 04: GIFTS TO INCLUDE CERTAIN TRANSFERS
-28[ (1)] For the purposes of this Act,-
(a) where property is transferred otherwise than for adequate consideration, the amount by which the [value of the property at 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;]
(b) 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;
(c) where there is a release, discharge, surrender, forfeiture, 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;
(d) 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.
29[(e) where a person who has an interest in property as a tenant for a term or for life or a remainder man 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.]
28[(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 subsection 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.]
SECTION 05: EXEMPTION IN RESPECT OF CERTAIN GIFTS
(1) Gift-tax shall not be charged under this Act in respect of gifts made by any person -
(i) of immovable property situate outside the territories to which this Act extends;
(ii) of movable property situate outside the said territories unless the person -
(a) being an individual, is a citizen of India and is ordinarily resident in the said territories, or
(b) not being an individual, is resident in the said territories, during the previous year in which the gift is made;
33[(iia) being an individual who is not resident in India, to any person resident in India, or foreign currency or other foreign exchange (as defined respectively in clause (c) and clause (d) of section 2 of Foreign Exchange Regulation Act, 1947), remitted from a country outside India in accordance with the provisions of the said Act, and any rules made there under, during the period commencing on the 29th day of October, 1965, and ending on the 28th day of February, 1966, or such later date as the Central Government may, by notification in the Official Gazette, specify in this behalf.]
34[(iib) being a person resident outside India, out of the moneys standing to his credit in a Non-resident (External) Account in any bank in India in accordance with the provisions ofthe Foreign Exchange Regulation Act, 1973and any rules made thereunder.
Explanation.- For the purposes of this clause, 'person resident outside India' has the
meaning assigned to it in clause (q) of section 2 of the Foreign Exchange Regulation Act, 1973;
(iic) being a citizen of India, or a person of Indian origin, who is not resident in India, to any relative of such person in India, of convertible foreign exchange remitted from a country outside India in accordance with the provisions of the Foreign Exchange Regulation Act, 1973and any rules made thereunder.
Explanation.- For the purposes of this clause and clause (iid),-
(a) a person shall be deemed to be of Indian origin if he or either of his parents or any of his grand-parents was born in undivided India;
(b) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973and any rules made there under;
(c) "relative" has the meaning assigned to it in clause (41) of section 2 of the Income-tax Act;
(d) "resident in India" shall have the meaning assigned to it in the Income-tax Act;
(iid) being a citizen of India or a person of Indian origin, who is not resident in India, to any relative of such person in India of property in the form of33[any foreign exchange asset as defined in clause (b) of section 115C of the Income-tax Act];
52[(iie) being an individual who is a non-resident Indian, once out of the moneys standing to his credit in an account opened and operated in accordance with the Non-resident (Non-repatriable) Rupee Deposit Scheme, 1992.
Explanation.- For the purposes of this clause, "non-resident Indian" shall have the meaning assigned to it in clause (e) of section 115C of the Income-tax Act:]
(iii) 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;
35 [(iiia) x x x]
36 [(iiib) of property in the form of Special Bearer Bonds, 1981;]
34[(iiic)48[being an individual or a Hindu undivided family, of property in the form of such Capital Investment Bonds] as the Central Government may, by notification in the Official Gazette, specify in this behalf subject to a maximum of rupees ten lakhs in value in the aggregate in one or more previous years : Provided that the exemption conferred by this clause shall be available only to a person who has initially subscribed to the said Bonds;]
57[(iiid) being an individual or a Hindu undivided family, of property in the form of such Relief Bonds, as the Central Government may, by notification in the Official Gazette, specify in this behalf subject to a maximum of rupees five lakhs in value in the aggregate in one or more previous years : Provided that the exemption conferred by this clause shall be available only to a person who has initially subscribed to the said Bonds;]
53[(iiie) being an individual who is a non-resident Indian,54[, of property in the form of the bonds specified under sub-clause (iid) of clause (15) of section 10 of the Income-tax Act: Provided that] where an individual, who is a nonresident Indian in any previous year in which the bonds are acquired, becomes a resident in India in any subsequent year, the provisions of this clause shall apply in respect of the gifts of property referred to in this clause in such subsequent year or any year thereafter.
Explanation.- For the purposes of this clause, the expressions -55[* * * * * *]
(b) "non-resident Indian" shall have the meaning assigned to it in clause (e) of section 115C of the Income-tax Act;]
(iv) to the Government or any local authority37[or any authority referred to in clause (20A) of section 10 of the Income-tax Act;]
(v) to any institution or fund established [or deemed to be established] for a charitable purpose to which the provisions of39[section 80G] of the Income-tax Act apply;
(va)
(i) to such temple, mosque, gurudwara, church or other place as has been notified by
the Central Government for the purposes of44[clause (b) of sub-section (2) of section 80G of the Income-tax Act]; or
(ii) by way of settlement on trust, of property or income from which, according to the
deed of settlement, is to be used exclusively in connection with the temple, mosque, gurudwara, church or other place specified therein and notified as aforesaid;]
35 [(vi) x x]
(vii) to any relative dependent upon him for support and maintenance, on the occasion of the marriage of the relative, subject to a maximum of rupees [one hundred thousand] in value in respect of the marriage of each such relative;
35 [(viii) x x]
35[(ix) x x] (x) under a will;
(xi) in contemplation of death;
(xii) for the education of his children, to the extent to which the gifts are proved to the satisfaction of the Gift-tax Officer as being reasonable having regard to the circumstances of the case;
(xiii) being an employer, to any employee by way of bonus, gratuity or pension or to the dependents of a deceased employee, to the extent to which the payment of such bonus, gratuity or pension is proved to the satisfaction of the Gift-tax Officer as being reasonable having regard to the circumstances of the case and is made solely in recognition of the services rendered by the employee;
35 [(xiv) x x]
(xv) to any person in charge of any such Bhoodan or Sampattidan movement as the Central Government may, by notification in the Official Gazette, specify;
35 [(xvi) x x x]
41[(1-A) Any reference in clause (v)49[x x x] of sub-section (1) to charitable purpose in relation to a gift made on or after the 1st day of April, 1964, shall be construed as not including a purpose the whole or substantially the whole of which is of a religious nature.]
(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 of45[rupees51[thirty thousand]] in value.
50 [(3) x x x]
Explanation.- For the purposes of this section,-
(a) an individual shall be deemed to be ordinarily resident, in the territories 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.]
(b) 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;
(c) a company shall be deemed to be resident in the territories to which this Act extends during the previous year, if-
(i) it is a company formed and registered under the Companies Act, 1956, or is an existing company within the meaning of that Act; or
(ii) during that year, the control and management of that company was situated wholly in the said territories;
(d) "gifts made in contemplation of death" has the same meaning as in section 191 of the Indian Succession Act, 1925.
SECTION 06: VALUE OF GIFTS, HOW DETERMINED
(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.]
SECTION 06A: AGGREGATION OF GIFTS MADE DURING A CERTAIN PERIOD
[Omitted by Finance Act 23 of 1986, S. 43 (w.e.f. 1-4-1987).
SECTION 07: GIFT-TAX AUTHORITIES AND THEIR JURISDICTION
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 120of 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.]
SECTION 07A: POWER OF COMMISSIONER RESPECTING SPECIFIED AREAS, CASES OR PERSONS
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 07AA: CONCURRENT JURISDICTION OF INSPECTING ASSISTANT COMMISSIONER AND GIFT-TAX OFFICER
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 07B: POWER TO TRANSFER CASES
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 08: CONTROL OF GIFT-TAX AUTHORITIES
-Section 118 of the Income-tax Act and any notification issued thereunder shall apply in relation to the control of gift-tax authorities as they apply in relation to the control of the corresponding income-tax authorities, except to the extent to which the Board may, by notification in the Official Gazette, otherwise direct in respect of any gift-tax authority.]
SECTION 08A: COMMISSIONERS OF GIFT-TAX (APPEALS)
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 09: INSTRUCTION TO SUBORDINATE AUTHORITIES
(1) The Board may, from time to time, issue such orders, instructions and directions to other gift-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall .be issued -
(a) so as to require any gift-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or
(b) so as to interfere with the discretion of the Deputy Commissioner (Appeals) or Commissioner (Appeals) in the exercise of his appellate functions.
(2) Without prejudice to the generality of the foregoing power,-
(a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 13-,14-,15-.16-,16B -] and34-or otherwise), general or special orders in respect of any class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be followed by other gift-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information;
(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any gift-tax authority, not being a Deputy Commissioner (Appeals) or Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law.]
SECTION 09A: DIRECTORS OF INSPECTION
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 10: JURISDICTION OF ASSESSING OFFICERS AND POWER TO TRANSFER CASES
(1) The provisions of sections 124and127 of the Income-tax Actshall, so far as may be, apply for the purposes of this Act as they apply for the purposes of the Income-tax Act, subject to-the modifications specified in sub-section (2).
(2) The modifications referred to in sub-sec. (1) shall be the following, namely :-
(a) insection 124 of the Income-tax Act,-
(i) in sub-section (3), references to the provisions of the Income-tax Act shall be construed as references to the corresponding provisions of the Gift-tax Act;
(ii) sub-section (5) shall be omitted;
(b) insection 127 of the Income-tax Act, in the Explanation below sub-section64[(4)], references to proceedings under the Income-tax Act shall be construed as including references to proceedings under the Gift-tax Act.]
SECTION 11: INSPECTOR OF GIFT-TAX
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 11A: COMMISSIONER COMPETENT TO PERFORM ANY FUNCTION OR FUNCTIONS.
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 11AA: GIFT-TAX OFFICER COMPETENT TO PERFORM ANY FUNCTION OR FUNCTIONS.
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 11B: CONTROL OF GIFT-TAX AUTHORITIES
[Omitted by Direct Tax Laws (Amendment) Act (4 of 1988), S. 165 (w.e.f. 1-4-1988).
SECTION 12: GIFT-TAX AUTHORITIES TO FOLLOW ORDERS, ETC., OF THE BOARD
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