Taxsutra Pro Issue 5 : Taxability under the Indian Gift Tax / Section 56(2) (x): Scenario based Discussion

This Fifth edition of Taxsutra Pro is titled Taxability under the Indian Gift Tax / Section 56(2)(x): Scenario Based Discussion. The paper is based on the critical insights given by Mr. Gautam Doshi in a webinar with Taxsutra, which is available here.

Section 56(2)(x) and the related erstwhile provisions have implications on a wide range of transactions. What was introduced as a mechanism to counter money laundering and unaccounted income soon evolved into a medium for imposing tax in all cases where property is received for less than adequate consideration. The paper begins by discussing the evolution of these provisions right from the Gift Tax Act, 1958. It then examines how the courts and tax authorities have interpreted and applied the provisions in a range of scenarios faced by corporates as well as individuals. The aim is to help readers understand the potential tax liability under this section when faced with these situations. The 23 scenarios discussed include: