The key provision is Section 56(2) of the Act, which deals with transfers of property (including money) where consideration is not received or is less than the fair market value. The main points from this section include:

• Threshold Limit:
  If the aggregate value of gifts (money or property) received by an individual or a Hindu Undivided Family (HUF) in a financial year exceeds ₹50,000, the entire amount is taxable as income under “Income from Other Sources.”

• Exemptions:
  The Act provides specific exemptions in this regard. For instance:

  • Gifts from Specified Relatives: Any gift, whether in money or property, received from a relative is fully exempt from tax.

  • Gifts on the Occasion of Marriage: Money or property received on marriage is exempt, with no upper limit.

  • Inheritance or Will: Any property or money received as inheritance, by way of a will, or in contemplation of death is not taxable.

  • Other Notified Exemptions: Certain gifts received from local authorities, approved trusts, or other specified entities may also be exempt depending on the conditions notified by the Government.

As per  Section 56(2)):
“Where any person receives any money, movable property or immovable property without consideration, or where the consideration is less than the fair market value, if the aggregate amount exceeds ₹50,000 in a financial year, then such amount is chargeable to tax under the head ‘Income from Other Sources’, subject to the exemptions provided…”