3. Charge of gift-tax. — 8
[(1)] Subject to the other provisions contained in this Act, there shall be
charged for every 9
[assessment year] commencing on and from the 1st day of April, 1958, 10[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
1. Ins. by The Taxation Laws (Extension to Union Territories) Regulation, 1963 (3 of 1963), by s. 3 and the Schedule
(w.e.f. 1-4-1963).
2. Ins. by Act 44 of 1980, s. 42 (w.e.f. 1-4-1980).
3. Ins. by Act 4 of 1988, s. 162 (w.e.f. 1-4-1988).
4. Ins. by Act 32 of 1994, s. 54 (w.e.f. 1-6-1994).
5. Subs. by Act 21 of 1998, s. 76 for “Deputy Director” (w.e.f. 1-10-1998).
6. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998).
7. Subs. by s. 76, ibid., for “Assistant Commissioner” (w.e.f. 1-10-1998).
8. Section 3 renumbered as sub-section (1) thereof by Act 23 of 1986, s. 41 (w.e.f. 1-4-1987).
9. Subs. by Act 53 of 1962, s. 3, for “financial year” (w.e.f. 1-4-1963).
10. Ins. by Act 23 of 1986, s. 41 (w.e.f. 1-4-1987).
9
a person during the previous year (other than gifts made before the 1st day of April, 1957), at the rate or
rates specified in 1
[Schedule I].
2
[(2)
3
[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.]
4
[(3) Notwithstanding anything contained in sub-section (2), the provisions of this Act shall cease to
apply and shall have no effect whatsoever in respect of any gift made on or after the 1st day of October,
1998.]
4. Gifts to include certain transfers. — 5
[(1)] For the purposes of this Act,—
(a ) where property is transferred otherwise than for adequate consideration, the amount by
which the 6
[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 :
7
[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 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 8
[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;
9
[(e) 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
1. Subs. by Act 3 of 1989, s. 79, for “the Schedule” (w.e.f. 1-4-1989).
2. Ins. by Act 23 of 1986, s. 41 (w.e.f. 1-4-1989).
3. Subs. by Act 4 of 1988, s. 163, for “Subject to the other provisions contained in this Act” (w.e.f. 1-4-1989).
4. Ins. by Act 21 of 1998, s. 75 (w.e.f. 1-1-1998).
5. Section 4 renumbered as sub-section (1) thereof by Act 32 of 1971, s. 37 (w.e.f. 1-4-1972).
6. Subs. by Act 49 of 1991, s. 84, for “market value of the property at the date of the transfer” (w.e.f. 1-4-1992).
7. The Proviso ins. by Act 25 of 1975, s. 29 (w.e.f. 1-4-1974).
8. Subs. by Act 4 of 1988, s. 161, for “Gift-tax officer” (w.e.f. 1-4-1988).
9. Ins. by Act 44 of 1980, s. 42 (w.e.f. 1-4-1980).
10
by which such value exceeds the consideration received, shall be deemed to be a gift made by such
person.]
1
[(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.]
5. 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;
2
[(iia) being an individual who is not resident in India, to any person resident in India, of foreign
currency or other foreign exchange as defined respectively, in clause (c) and clause (d) of section 2 of
the Foreign Exchange Regulation Act, 1947 (7 of 1947), remitted from a country outside India in
accordance with the provisions of the said Act and any rules made thereunder, during the period
commencing on the 26th 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.
Explanation. —For the purposes of this clause, the expression “resident in India” shall have the
meaning assigned to it in the Income-tax Act;]
3
[(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 of the
Foreign Exchange Regulation Act, 1973 (46 of 1973), and 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 (46 of 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, 1973 (46 of 1973), and
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;
1. Ins. by Act 32 of 1971, s. 37 (w.e.f. 1-4-1972).
2. Ins. by Act 13 of 1966, s. 41 (w.e.f. 1-4-1966).
3. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983).
11
(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, 1973 (46 of 1973), and any rules made thereunder;
(c) “relative” has the meaning assigned to it in clause (41) of section 2 of the Income-tax
Act;
(d) “resident of 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 of 1
[any foreign exchange asset as defined in
clause (b) of section 115C of the Income-tax Act];]
2
[(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;
3
* * * * *
4
[(iiib) of property in the form of Special Bearer Bonds, 1991;]
5
[(iiic)
6
[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;]
7
[(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;]
8
[(iiie) being an individual who is a non-resident Indian, 9
[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 non-resident 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.
1. Subs. by Act 12 of 1983, s. 42, for certain words (w.e.f. 1-4-1984).
2. Ins. by Act 38 of 1993, s. 41 (w.e.f. 1-4-1993).
3. Clause (iiia) omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987).
4. Ins. by Act 7 of 1981, s. 7 (w.e.f. 12-1-1981).
5. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983).
6. Subs. by Act 12 of 1983, s. 42 for “of property in the form of such Capital Investment Bonds” (w.e.f. 1-4-1983).
7. Ins. by Act 26 of 1988, s. 67 (w.e.f. 1-4-1988).
8. Ins. by Act 3 of 1989, s. 80 (w.e.f. 1-4-1989).
9. Subs. by Act 49 of 1991, s. 85, for certain words (w.e.f. 1-4-1991).
12
Explanation. —For the purposes of this clause, the expressions—
1
* * * * *
(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 authority 2
[or any authority referred to in clause (20A) of
section 10 of the Income-tax Act ;]
(v) to any institution or fund established 3
[or deemed to be established] for a charitable purpose
to which the provisions of 4
[section 80G] of the Income-tax Act apply ;
5
[(va) (i) to such temple, mosque, gurdwara, church or other place as has been notified by the
Central Government for the purposes of 6
[clause (b) of sub-section (2) of section 80G of the
Income-tax Act] ; or
(ii) by way of settlement on trust, of property, the income from which, according to the deed
of settlement, is to be used exclusively in connection with the temple, mosque, gurdwara, church
or other place specified therein and notified as aforesaid ;]
7
* * * * *
(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 8
[one hundred thousand] in value in respect
of the marriage of each such relative ;
9
* * * * *
10* * * * *
(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 11[Assessing 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
dependants of a deceased employee, to the extent to which the payment of such bonus, gratuity or
pension is proved to the satisfaction of the 11[Assessing 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;
12* * * * *
1. Clause (a) omitted by Act 49 of 1991, s. 85 (w.e.f. 1-4-1991).
2. Ins. by Act 66 of 1976, s. 28 (w.e.f. 1-4-1977).
3. Ins. by Act 21 of 1973, s. 21 (w.e.f. 1-4-1974).
4. Subs. by Act 32 of 1971, s. 37, for “section 88” (w.e.f. 1-4-1968).
5. Ins. by Act 10 of 1965, s. 71 (w.e.f. 1-4-1965).
6. Subs. by Act 43 of 1971, s. 37, for “sub-section (6) of section 88 of the Income-tax Act, 1961” (w.e.f. 1-4-1968).
7. Clause (vi) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
8. Subs. by Act 32 of 1994, s. 55, for “thirty thousand” (w.e.f. 1-4-1995).
9. Clause (viii) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
10. Clause (ix) omitted, s. 42, ibid, (w.e.f. 1-4-1987).
11. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988).
12. Clause (xiv) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
13
(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.
1
* * * * *
2
[(1A) Any reference in clause (v)
3
*** 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 of
rupees 4
[thirty thousand] in value.
5
* * * * *
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 6
[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 (1 of 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 (39 of 1925).
7
[6. 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.]
6A. [Aggregation of gifts made during a certain period.] — Omitted by the Finance Act, 1986 (23 of
1986), s. 43 (w.e.f. 1-4-1987).