The Gift-tax Act, 1958

(1) This Act may be called the Gift-tax Act, 1958. (2) It extends to 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.

In this Act, unless the context otherwise requires, 1* * * * * 2(ii) Appellate Tribunal means the Appellate Tribunal constituted under section 252 of theIncome-tax Act; (iii) assessee means a person by whom gift-tax or any other sum of money is payable underthis Act, and includes (a) every person in respect of whom any proceeding under this Act has been taken for thedetermination of gift-tax payable by him or by any other person or the amount of refund due tohim 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; 3(iiia) Assessing Officer means the 4Assistant Commissioner or Deputy Commissioner orthe Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or ordersissued under sub-section (1) or sub-section (2) of section 120 or any other provision of theIncome-tax Act which apply for the purposes of gift-tax under section 7 of this Act, and also the5Joint Commissioner who is directed under clause (b) of sub-section (4) of the said section 120 toexercise or perform all or any of the powers and functions conferred on or assigned to the AssessingOfficer under that Act; (iv) assessment includes reassessment; (iva) assessment year means the period of twelve months commencing on the 1st day of Aprilevery year; (v) Board means the 6Central Board of Direct Taxes constituted under the Central Boards ofRevenue Act, 1963 (54 of 1963); 7(va) charitable purpose includes relief of the poor, education, medical relief, and theadvancement of any other object of general public utility 8***; 9* * * * * 10* * * * * 11(vii) the expressions company, Indian company and company in which the public aresubstantially interested shall have the meanings respectively assigned to them under section 2 of theIncome-tax Act; 12* * * * * (viii) donee means any person who acquires any property under a gift, and, where a gift ismade 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; 13(xi) the expressions firm, partner and partnership shall have the meanings respectivelyassigned to them under section 2 of the Income-tax Act; (xii) gift means the transfer by one person to another of any existing movable or immovableproperty made voluntarily and without consideration in money or moneys worth, and 14includes thetransfer or conversion of any property referred to in section 4, deemed to be a gift under that section. 15Explanation.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 clauseto be the owner thereof made voluntarily and without consideration in money or moneys worth, shallbe deemed to be a gift made by such person; 16* * * * * 17(xiv) ―Income-tax Act‖ means the Income-tax Act, 1961 (43 of 1961); 18* * * * * 19* * * * * 20* * * * * 21(xvib) ―legal representative‖ has the meaning assigned to it in clause (11) of section 2 of theCode of Civil Procedure, 1908 (5 of 1908); 22* * * * * (xviii) ―person‖ includes a Hindu undivided family or a company or an association or a body ofindividuals 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 assessee 23having no source of income, profits or gains or having asource of income, profits or gains in respect of which there is no previous year under theIncome-tax Act, means the twelve months ending on the 31st day of March immediatelypreceding the assessment year; 24* * * * * (c) in the case of any other assessee, means the previous year as defined in 25section 3 of thethe Income-tax Act if an assessment were to be made under that Act for that year : 26Provided that where a person who has not been assessed under this Act for any assessmentyear makes a gift on a date which does not fall within a previous year as defined insub-clause (a)27*** or sub-clause (c), the previous year shall be the twelve months ending on the31st day of March immediately preceding the assessment year; 28* * * * * (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 thecompany or association; or (b) any person connected with the management of the affairs of the company or associationupon whom the 29Assessing Officer has served a notice of his intention of treating him as theprincipal officer thereof; (xxii) ―property‖ includes any interest in property, movable or immovable; (xxiii) ―taxable gifts‖ means gifts chargeable to gift-tax under this Act; 301(xxiiia) territories to which this Act extends shall be deemed to include the Union territories ofDadra 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 anyassessment for the assessment year commencing on the 1st day of April, 1963, or for anysubsequent 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 appointment 31(whether general, special or subject to anyrestrictions as to the persons in whose favour the appointment may be made) of property vestedin any person, not the owner of the property, to determine its disposition in favour of any personother than the donee of the power; and (d) any transaction entered into by any person with intent thereby to diminish directly orindirectly the value of his own property and to increase the value of the property of any otherperson; 32(xxv) the expressions ―Chief Commissioner‖, ―Director General‖, ―Commissioner‖,―Commissioner (Appeals), ―Director, 334―Additional Director of Income-tax‖, ―AdditionalCommissioner of Income-tax‖, ―Additional Commissioner of Income-tax (Appeals), ―34JointDirector35―Joint Commissioner, ―Deputy Commissioner (Appeals), 36―Assistant CommissionerCommissioner or Deputy Commissioner‖, ―Income-tax Officer, ―Tax Recovery Officer‖ and―Inspector of Income-tax shall have the meanings respectively assigned to them under section 2of the Income-tax Act.

1(1) Subject to the other provisions contained in this Act, there shall becharged for every 2assessment year commencing on and from the 1st day of April, 1958, 3but beforethe 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 orrates specified in 4Schedule I. 5(2)6Subject 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 1stday of April, 1987, gift-tax in respect of the gifts, if any, made by a person during the previous year, at therate of thirty per cent. on the value of all taxable gifts. 7(3) Notwithstanding anything contained in sub-section (2), the provisions of this Act shall cease toapply and shall have no effect whatsoever in respect of any gift made on or after the 1st day of October,1998.

1(1) For the purposes of this Act, (a ) where property is transferred otherwise than for adequate consideration, the amount bywhich the 2value of the property as on the date of the transfer and determined in the manner laiddown in Schedule II, exceeds the value of the consideration shall be deemed to be a gift made by thetransferor : 3Provided that nothing contained in this clause shall apply in any case where the property istransferred to the Government or where the value of the consideration for the transfer is determined orapproved by the Central Government or the Reserve Bank of India; (b) where property is transferred for a consideration which, having regard to the circumstances ofthe case, has not passed or is not intended to pass either in full or in part from the transferee to thetransferor, the amount of the consideration which has not passed or is not intended to pass shall bedeemed to be a gift made by the transferor; (c) where there is a release, discharge, surrender, forfeiture or abandonment of any debt, contractor 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 thesatisfaction of the 4Assessing Officer to have been bona fide, shall be deemed to be a gift made bythe 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 inwhatever manner in himself and any other person jointly without adequate consideration and suchother person makes an appropriation from or out of the said property, the amount of the appropriationused for the benefit of the person making the appropriation or for the benefit of any other person shallbe deemed to be a gift made in his favour by the person who causes or has caused the property to beso vested; 5(e) where a person who has an interest in property as a tenant for a term or for life or aremainderman surrenders or relinquishes his interest in the property or otherwise allows his interest tobe terminated without consideration or for a consideration which is not adequate, the value of theinterest 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 suchperson. 6(2) Where, in the case of an individual being a member of a Hindu undivided family, any propertyhaving been the separate property of the individual has been converted by the individual into propertybelonging to the family through the act of impressing such separate property with the character ofproperty belonging to the family or throwing it into the common stock of the family (such property beinghereafter in this sub-section referred to as the converted property), then, notwithstanding anythingcontained in any other provision of this Act or any other law for the time being in force, for the purpose ofcomputation of the taxable gifts made by the individual, the individual shall be deemed to have made agift of so much of the converted property as the members of the Hindu undivided family other than suchindividual would be entitled to, if a partition of the converted property had taken place immediately aftersuch conversion.

(1) Gift-tax shall not be charged under this Act inrespect 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 inwhich the gift is made; 1(iia) being an individual who is not resident in India, to any person resident in India, of foreignforeign currency or other foreign exchange as defined respectively, in clause (c) and clause (d) ofsection 2 of the Foreign Exchange Regulation Act, 1947 (7 of 1947), remitted from a country outsideIndia in accordance with the provisions of the said Act and any rules made thereunder, during theperiod 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 inthis behalf. Explanation. For the purposes of this clause, the expression resident in India shall have themeaning assigned to it in the Income-tax Act; 2(iib) being a person resident outside India, out of the moneys standing to his credit in aNon-resident (External) Account in any bank in India in accordance with the provisions of theForeign 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 meaningassigned 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 anyrelative of such person in India, of convertible foreign exchange remitted from a country outside Indiain accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), andany 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 hisgrand-parents was born in undivided India; (b) convertible foreign exchange means foreign exchange which is for the time beingtreated by the Reserve Bank of India as convertible foreign exchange for the purposes of theForeign 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-taxAct; (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 anyrelative of such person in India of property in the form of 3any foreign exchange asset as defined inclause (b) of section 115C of the Income-tax Act; 4(iie) being an individual who is a non-resident Indian, once out of the moneys standing to hiscredit 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 meaningassigned 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 thatGovernment, by notification in the Official Gazette exempts from gift-tax; 5* * * * * 6(iiib) of property in the form of Special Bearer Bonds, 1991; 7(iiic)8being an individual or a Hindu undivided family, of property in the form of such CapitalInvestment Bonds as the Central Government may, by notification in the Official Gazette, specify inthis behalf subject to a maximum of rupees ten lakhs in value in the aggregate in one or moreprevious years : Provided that the exemption conferred by this clause shall be available only to a person who hasinitially subscribed to the said bonds; 9(iiid) being an individual or a Hindu undivided family, of property in the form of such ReliefBonds, as the Central Government may, by notification in the Official Gazette, specify in this behalfsubject 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 hasinitially subscribed to the said Bonds; 10(iiie) being an individual who is a non-resident Indian, 11of property in the form of the bondsspecified 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 whichthe bonds are acquired, becomes a resident in India in any subsequent year, the provisions of thisclause shall apply in respect of the gifts of property referred to in this clause in such subsequent yearor any year thereafter. Explanation. For the purposes of this clause, the expressions 12* * * * * (b) non-resident Indian shall have the meaning assigned to it in clause (e) of section 115Cof the Income-tax Act; (iv) to the Government or any local authority 13or any authority referred to in clause (20A) ofsection 10 of the Income-tax Act ; (v) to any institution or fund established 14or deemed to be established for a charitable purposeto which the provisions of 15section 80G of the Income-tax Act apply ; 16(va) (i) to such temple, mosque, gurdwara, church or other place as has been notified by theCentral Government for the purposes of 17clause (b) of sub-section (2) of section 80G of theIncome-tax Act ; or (ii) by way of settlement on trust, of property, the income from which, according to the deedof settlement, is to be used exclusively in connection with the temple, mosque, gurdwara, churchor other place specified therein and notified as aforesaid ; 18* * * * * (vii) to any relative dependent upon him for support and maintenance, on the occasion of themarriage of the relative, subject to a maximum of rupees 19one hundred thousand in value in respectof the marriage of each such relative ; 20* * * * * 21* * * * * (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 thesatisfaction of the 22Assessing Officer as being reasonable having regard to the circumstances of thecase ; (xiii) being an employer, to any employee by way of bonus, gratuity or pension or to thedependants of a deceased employee, to the extent to which the payment of such bonus, gratuity orpension is proved to the satisfaction of the 22Assessing Officer as being reasonable having regard tothe circumstances of the case and is made solely in recognition of the services rendered by theemployee; 23* * * * * (xv) to any person in charge of any such Bhoodan or Sampattidan movement as the CentralGovernment may, by notification in the Official Gazette, specify. 24* * * * * 25(1A) Any reference in clause (v)26*** of sub-section (1) to charitable purpose in relation to a giftmade on or after the 1st day of April, 1964, shall be construed as not including a purpose the whole orsubstantially 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 chargedunder this Act in respect of gifts made by any person during the previous year, subject to a maximum ofrupees 27thirty thousand in value. 28* * * * * Explanation.For the purposes of this section, (a) an individual shall be deemed to be ordinarily resident in the territories to which this Actextends during the previous year in which the gift is made if during that year he is regarded as aresident but not as not ordinarily resident 29within 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 tothe territories to which this Act extends ; (b) a Hindu undivided family, firm or other association of persons shall be deemed to be residentin the territories to which this Act extends during any previous year unless, during that year, thecontrol 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 duringthe previous year, if (i) it is a company formed and registered under the Companies Act, 1956 (1 of 1956), or isan existing company within the meaning of that Act ; or (ii) during that year, the control and management of that company was situated wholly in thesaid territories ; (d) gifts made in contemplation of death‖ has the same meaning as in section 191 of the IndianSuccession Act, 1925 (39 of 1925).