Section 56(2) (x) of the Income-Tax Act seeks to impose tax in the hands of recipient subject to certain conditions.
My cousin gifted me diamond jewellery. Do I need to pay income tax on it?
– Komal Asthana
Section 56(2) (x) of the Income-Tax Act seeks to impose tax in the hands of recipient subject to certain conditions. According to the said provision, the receipt of property (which may include jewellery) by any person without consideration, the fair market value of which is over Rs 50,000 shall be taxable in the hands of the recipient under the head “income from other sources”. While there is a specific exemption to gifts received from specified relatives, ‘cousin’ does not fall within the definition of ‘relative’. Accordingly, gift received by you from your cousin shall be taxable in your hands.
I am holding shares of a private limited company. I wish to contribute some of these shares to an irrevocable trust set up for the benefit of my relatives. What will be its taxability?
As per Section 47(iii) of the Income-Tax Act, any transfer of a capital asset under any irrevocable trust is not considered as transfer and hence consequently, no capital gains shall be attracted. Further, from the transferee perspective (i.e. the recipient), Section 56(2)(x) of the I-T Act provides specific exemption from receipt by a trust from an individual, where the trust is solely created for the benefit of the relatives of the individual. However, clubbing provisions may apply in the hands of transferor where asset has been transferred to a trust which has been set up for the benefit of spouse or son’s wife.
I have filed late return of income for AY 2017-18. Can I revise my return of income as I forgot to claim the foreign tax credit?
— T S MadhusudanA belated return (a return which is filed after the due date under Section 139(1)) can be revised. In case you had omitted to claim the foreign tax credit in the original return, you may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. A revised return for financial year 2016-17 can be filed within two years from the end of the financial year. Thus, return for financial year 2016-17 can be revised by March 31, 2019.
The writer is the founder of RSM Astute
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