Chapter IPRELIMINARY
1. Short title, extent and commencement
This Act may be called the Gift-tax Act, 1958.
It extends to the whole of India except the State of Jammu and Kashmir*.
It shall be deemed to have come into force on the 1st day of April, 1958.
2. Definitions
In this Act, unless the context otherwise requires,— * * * * * [(ii) “Appellate Tribunal” means the Appellate Tribunal constituted under section 252 of the Income-tax Act;
“assessee” means a person by whom gift-tax or any other sum of money is payable under this Act, and includes—
every person in respect of whom any proceeding under this Act has been taken for the determination of gift-tax payable by him or by any other person or the amount of refund due to him or such other person;
every person who is deemed to be an assessee under this Act;
every person who is deemed to be an assessee in default under this Act; [(iiia) “Assessing Officer” means the [Assistant Commissioner or Deputy Commissioner] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of the Income-tax Act which apply for the purposes of gift-tax under section 7 of this Act, and also the [Joint Commissioner] who is directed under clause (b) of sub-section (4) of the said section 120 to exercise or perform all or any of the powers and functions conferred on or assigned to the Assessing Officer under that Act;]
“assessment” includes reassessment; * Subject to verification and confirmation by the Administrative ministry.
1. Clause (i) omitted by Act 4 of 1988, s. 162 (w.e.f. 1
4-1988).
2. Subs. by Act 53 of 1962, s. 2, for clauses (ii), (iii) and (iv) (w.e.f. 1
4-1963).
3. Ins. by Act 4 of 1988, s. 162 (w.e.f. 1
4-1988).
4. Subs. by Act 21 of 1998, s. 76, for “Assistant Commissioner” (w.e.f. 1
10-1998).
5. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1
10-1998). *. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and Kashmir and the Union territory of Ladakh.
“assessment year” means the period of twelve months commencing on the 1st day of April every year;]
“Board” means the [Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)]; [(va) “charitable purpose” includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility ***;] * * * * * * * * * * [(vii) the expressions “company”, “Indian company” and “company in which the public are substantially interested” shall have the meanings respectively assigned to them under section 2 of the Income-tax Act;] * * * * * (viii) “donee” means any person who acquires any property under a gift, and, where a gift is made to a trustee for the benefit of another person, includes both the trustee and the beneficiary;
“donor” means any person who makes a gift;
“executor” means an executor or administrator of the estate of a deceased person; [(xi) the expressions “firm”, “partner” and “partnership” shall have the meanings respectively assigned to them under section 2 of the Income-tax Act;]
“gift” means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money’s worth, and [includes the transfer or conversion of any property referred to in section 4, deemed to be a gift under that section]. [Explanation.—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 clause to be the owner thereof made voluntarily and without consideration in money or money’s worth, shall be deemed to be a gift made by such person;] * * * * * 1. Subs. by Act 54 of 1963, s. 5 for “Central Board of Revenue constituted under the Central Board of Revenue Act, 1924” (w.e.f. 1-1-1964). 2. Ins. by Act 53 of 1962, s. 2 (w.e.f. 1-4-1963). 3. The words “not involving the carrying on of any activity for profit” omitted by Act 67 of 1984, s. 71 (w.e.f. 1-4-1984).
4. Clause (vi) omitted by Act 4 of 1988, s. 162 (w.e.f. 1
4-1988).
5. Clause (via) omitted by s. 162, ibid. (w.e.f. 1
4-1988).
6. Subs. by s. 162, ibid., for clause (vii) (w.e.f. 1
4-1988).
7. Clause (viia) omitted by s. 162, ibid. (w.e.f. 1
4-1988).
8. Subs. by s. 162, ibid., for clause (xi) (w.e.f. 1
4-1989).
9.
Subs. by Act 32 of 1971, s. 37, for “includes the transfer of any property deemed to be a gift under section 4” (w.e.f. 1-4-1972).
10. Ins. by Act 11 of 1987, s. 90 (w.e.f. 1
4-1988).
11. Clause (xiii) omitted by Act 4 of 1988, s. 162 (w.e.f. 1
4-1989). javascript:ShowFootnote('ftn13dtmdiv6chp7'); [(xiv) “Income-tax Act” means the Income-tax Act, 1961 (43 of 1961);] * * * * * * * * * * * * * * * [(xvib) “legal representative” has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908 (5 of 1908);] * * * * * (xviii) “person” includes a Hindu undivided family or a company or an association or a body of individuals or persons, whether incorporated or not;
“prescribed” means prescribed by rules made under this Act;
“previous year”, in relation to any assessment year—
in the case of an assessee [having no source of income, profits or gains or] having a source of income, profits or gains in respect of which there is no previous year under the Income-tax Act, means the twelve months ending on the 31st day of March immediately preceding the assessment year; * * * * *
in the case of any other assessee, means the previous year as defined in [section 3] of the Income-tax Act if an assessment were to be made under that Act for that year : [Provided that where a person who has not been assessed under this Act for any assessment year makes a gift on a date which does not fall within a previous year as defined in sub-clause (a) *** or sub-clause (c), the previous year shall be the twelve months ending on the 31st day of March immediately preceding the assessment year; * * * * *]
“principal officer”, used with reference to a company or any association of persons, means—
the secretary and treasurer, manager, managing agent, managing director or agent of the company or association; or
any person connected with the management of the affairs of the company or association upon whom the [Assessing Officer] has served a notice of his intention of treating him as the principal officer thereof; 1. Subs. by Act 53 of 1962, s. 2, for clause (xiv) (w.e.f. 1-4-1963). 2. Clause (xv) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 3. Clause (xvi) omitted by, s. 162, ibid. (w.e.f. 1-4-1989). 4. Clause (xvia) omitted by, s. 162, ibid. (w.e.f. 1-4-1989). 5. Ins. by Act 53 of 1962, s. 2 (w.e.f. 1-4-1963). 6. Clause (xvii) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 7. Ins. by Act 12 of 1959, s. 27 (w.e.f. 1-4-1959). 8. Sub-clause (b) omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989). 9. Subs. by Act 53 of 1962, s. 2, for “clause (11) of section 2” (w.e.f. 1-4-1963).
10. Ins. by Act 12 of 1959, s. 27 (w.e.f. 1
4-1959).
11. The words “or sub
clause (b)” omitted by Act 4 of 1988, s. 162 (w.e.f. 1-4-1989).
12. The Second proviso omitted by s.162, ibid, (w.e.f. 1
4-1989).
13. Subs. by s. 161, ibid., for “Gift
tax Officer” (w.e.f. 1-4-1988). javascript:ShowFootnote('ftn26dtmdiv6chp7'); (xxii) “property” includes any interest in property, movable or immovable; (xxiii) “taxable gifts” means gifts chargeable to gift-tax under this Act; [(xxiiia) territories to which this Act extends shall be deemed to include the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu, and Pondicherry—
as respects any period for the purposes of section 5; and
as respects any period included in the previous year, for the purposes of making any assessment for the assessment year commencing on the 1st day of April, 1963, or for any subsequent 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—
the creation of a trust in property;
the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property;
the exercise of a power of appointment [(whether general, special or subject to any restrictions as to the persons in whose favour the appointment may be made)] of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power; and
any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person; [(xxv) the expressions “Chief Commissioner”, “Director General”, “Commissioner”, “Commissioner (Appeals)”, “Director”, [“Additional Director of Income-tax”, “Additional Commissioner of Income-tax”, “Additional Commissioner of Income-tax (Appeals)”, “ [Joint Director”]] [“Joint Commissioner”], “Deputy Commissioner (Appeals)”, [“Assistant Commissioner or Deputy Commissioner”], “Income-tax Officer”, “Tax Recovery Officer” and “Inspector of Income-tax” shall have the meanings respectively assigned to them under section 2 of the Income-tax Act.]
Chapter IICHARGE OF GIFT-TAX AND GIFTS SUBJECT TO SUCH CHARGE
3. Charge of gift
tax. — [(1)] Subject to the other provisions contained in this Act, there shall be charged for every [assessment year] commencing on and from the 1st day of April, 1958, [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). javascript:ShowFootnote('ftn35dtmdiv6chp7'); javascript:ShowFootnote('ftn35dtmdiv6chp7'); javascript:ShowFootnote('ftn35dtmdiv6chp7'); a person during the previous year (other than gifts made before the 1st day of April, 1957), at the rate or rates specified in [Schedule I]. [(2) [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.] [(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. — [(1)] For the purposes of this Act,— (a ) where property is transferred otherwise than for adequate consideration, the amount by which the [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 : [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;]
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;
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 [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;
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; [(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). by which such value exceeds the consideration received, shall be deemed to be a gift made by such person.] [(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—
of immovable property situate outside the territories to which this Act extends;
of movable property situate outside the said territories unless the person—
being an individual, is a citizen of India and is ordinarily resident in the said territories, or
not being an individual, is resident in the said territories, during the previous year in which the gift is made; [(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.
For the purposes of this clause, the expression “resident in India” shall have the meaning assigned to it in the Income-tax Act;] [(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.
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);
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.
For the purposes of this clause and clause (iid),—
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).
“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;
“relative” has the meaning assigned to it in clause (41) of section 2 of the Income-tax Act;
“resident of India” shall have the meaning assigned to it in the Income-tax Act;]
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 [any foreign exchange asset as defined in clause (b) of section 115C of the Income-tax Act];] [(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.
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; * * * * * [(iiib) of property in the form of Special Bearer Bonds, 1991;] [(iiic) [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 : 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).
Provided that the exemption conferred by this clause shall be available only to a person who has initially subscribed to the said bonds;] [(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;] [(iiie) being an individual who is a non-resident Indian, [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.
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;]
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). javascript:ShowFootnote('ftn62dtmdiv6chp7');
For the purposes of this clause, the expressions— * * * * *
“non-resident Indian” shall have the meaning assigned to it in clause (e) of section 115C of the Income-tax Act;]
to the Government or any local authority [or any authority referred to in clause (20A) of section 10 of the Income-tax Act ;]
to any institution or fund established [or deemed to be established] for a charitable purpose to which the provisions of [section 80G] of the Income-tax Act apply ; [(va) (i) to such temple, mosque, gurdwara, church or other place as has been notified by the Central Government for the purposes of [clause (b) of sub-section (2) of section 80G of the Income-tax Act] ; or
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 ;] * * * * *
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 [one hundred thousand] in value in respect of the marriage of each such relative ; * * * * * * * * * *
under a will ;
in contemplation of death ;
for the education of his children, to the extent to which the gifts are proved to the satisfaction of the [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 [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; * * * * * 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).
to any person in charge of any such Bhoodan or Sampattidan movement as the Central Government may, by notification in the Official Gazette, specify. * * * * * [(1A) Any reference in clause (v) *** 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.]
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 [thirty thousand] in value. * * * * *
For the purposes of this section,—
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 [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] ;
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 ;
a company shall be deemed to be resident in the territories to which this Act extends during the previous year, if—
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
during that year, the control and management of that company was situated wholly in the said territories ;
“gifts made in contemplation of death” has the same meaning as in section 191 of the Indian Succession Act, 1925 (39 of 1925). [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.
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). 1. Clause (xvi) omitted by 23 of 1986, s. 42, (w.e.f. 1-4-1987). 2. Ins. by Act 15 of 1965, s. 21 (w.e.f. 1-4-1964). 3. The words, brackets and figures “or clause (vi)”omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987). 4. Subs. by Act 38 of 1993, s. 41, for “twenty thousand” (w.e.f. 1-4-1994). 5. Sub-section (3) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1989). 6. Subs. by Act 53 of 1962, s. 4, for “in the taxable territories with the meaning of the income-tax Act” (w.e.f. 1-4-1963). 7. Subs. by Act 3 of 1989, s. 81, for section 6 (w.e.f. 1-4-1989).
Chapter IIIGIFT-TAX AUTHORITIES [7. Gift-tax authorities and their jurisdiction. —The income-tax authorities specified in section 116 of the Income-tax Act shall be the gift-tax authorities for the purposes of this Act and every such authority shall exercise the powers and perform the functions of a gift-tax authority under this Act in respect of any person within his jurisdiction, and for this purpose his jurisdiction under this Act shall be the same as he has under the Income-tax Act by virtue of orders or directions issued under section 120 of that Act (including orders or directions assigning concurrent jurisdiction) or under any other provision of that Act.
7A. [Powers of Commissioner respecting specified areas, cases, persons, etc.]
Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 (w.e.f. 1-4-1988).
7AA. [Concurrent jurisdiction of Inspecting Assistant Commissioner and Gift
tax Officer.] — Omitted by s. 165, ibid. (w.e.f. 1-4-1988).
7B. [Power to transfer cases.]
Omitted by s. 165, ibid. (w.e.f. 1-4-1988).
8. Control of gift
tax authorities. —Section 118 of the Income-tax Act and any notification issued thereunder shall apply in relation to the control of gift-tax authorities as they apply in relation to the control of the corresponding income-tax authorities, except to the extent to which the Board may, by notification in the Official Gazette, otherwise direct in respect of any gift-tax authority.
8A. [Commissioners of gift
tax Appeals.] — Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 (w.e.f. 1-4-1988).
9. Instructions to subordinate authorities
The Board may, from time to time, issue such orders, instructions and directions to other gift-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board :
Provided that no such orders, instructions or directions shall be issued—
so as to require any gift-tax authority to make a particular assessment or to dispose of a particular case in a particular manner ; or
so as to interfere with the discretion of the Deputy Commissioner (Appeals) or Commissioner (Appeals) in the exercise of his appellate functions.
Without prejudice to the generality of the foregoing power,—
the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections [13, 14, 15, 16, 16B,] 17 and 34 or otherwise), general or special orders in respect of any class of cases, setting forth directions or instructions (not being prejudicial to assessees) as to the guidelines, principles or procedures to be 1. Subs. by Act 4 of 1988, s. 164, for sections 7, 8, 9 and 10 (w.e.f. 1-4-1988). 2. Subs. by Act 12 of 1990, s. 59, for “15, 16” (w.e.f. 1-4-1990). followed by other gift-tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information ;
the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any gift-tax authority, not being a Deputy Commissioner (Appeals) or Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law.]
9A. [Directors of Inspection.]
Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 (w.e.f. 1-4-1988).
10. Jurisdiction of Assessing Officers and power to transfer cases
The provisions of sections 124 and 127 of the Income-tax Act shall, so far as may be, apply for the purposes of this Act as they apply for the purposes of the Income-tax Act, subject to the modifications specified in sub-section (2).
The modifications referred to in sub-section (1) shall be the following, namely :—
in section 124 of the Income-tax Act,—
in sub-section (3), references to the provisions of the Income-tax Act shall be construed as references to the corresponding provisions of the Gift-tax Act ;
sub-section (5) shall be omitted ;
in section 127 of the Income-tax Act, in the Explanation below sub-section [(4)] references to proceedings under the Income-tax Act shall be construed as including references to proceedings under the Gift-tax Act.]
11. [Inspector of Gift
tax.] — Omitted by the Direct Tax Laws (Amendment) Act, 1988 (4 of 1988), s. 165 (w.e.f. 1-4-1988).
11A. [Commissioner competent to perform any function or functions.]
Omitted by s. 165, ibid. (w.e.f. 1-4-1988).
11AA. [Gift
tax Officer competent to perform any function or functions.] — Omitted by s. 165, ibid. (w.e.f. 1-4-1988).
11B. [Control of gift
tax authorities.] — Omitted by s. 165, ibid. (w.e.f. 1-4-1988).
12. [Gift
tax authorities to follow orders, etc., of the Board.] — Omitted by s. 165, ibid. (w.e.f. 1-4- 1988). [12A. Power of [Chief Commissioner or Commissioner] and of [ [Joint Commissioner] to make enquiries under this Act. — The [Chief Commissioner or Commissioner] and the [ [Joint Commissioner] shall be competent to make any enquiry under this Act, and for this purpose, shall have all the powers that an [Assessing Officer] has under this Act in relation to the making of enquiries.] 1. Subs. by Act 3 of 1989, s. 82, for “(5)” (w.e.f. 1-4-1988). 2. Ins. by Act 53 of 1962, s. 9 (w.e.f. 1-4-1963). 3. Subs. by Act 4 of 1988, s. 161, for “Commissioner of Gift-tax” (w.e.f. 1-4-1988). 4. Subs. by s. 161, ibid., for “Inspecting Assistant Commissioner of Gift-tax” (w.e.f. 1-4-1988). 5. Subs. by Act 21 of 1998, s. 76, for “Deputy Commissioner” (w.e.f. 1-10-1988). 6. Subs. by Act 4 of 1988, s. 161, ibid., for “Gift-tax Officer” (w.e.f. 1-4-1988).
Chapter IVASSESSMENT
13. Return of gifts
[(1) Every person who during a previous year has made any taxable gifts, or is assessable in respect of the taxable gifts made by any other person under this Act, which, in either case, exceeded the maximum amount not chargeable to gift-tax, shall, on or before the 30th day of June of the corresponding assessment year, furnish a return of such gifts in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.
Notwithstanding anything contained in any other provision of this Act, a return which shows the amount of taxable gifts below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished :
Provided that this sub-section shall not apply to a return furnished in response to a notice under section 16.] * * * * * [14. Return after due date and amendment of return. — If any person has not furnished a return within the time allowed under sub-section (1) of section 13 or by a notice issued under clause (i) of sub-section (4) of section 15, or having furnished a return discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, 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 :
Provided that—
where such return or revised return relates to the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year, it may be furnished at any time up to and inclusive of the 31st day of March, 1990 or before the completion of the assessment, whichever is earlier;
where such return or revised return relates to the assessment year commencing on the 1st day of April, 1988, it may be furnished at any time up to and inclusive of the 31st day of March, 1991, or before the completion of the assessment, whichever is earlier.] [14A. Return by whom to be signed. — The return made under section 13 or section 14 shall be signed and verified— [(a) in the case of an individual,—
by the individual himself ;
where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf ;
where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf ; and
where, for any other reason, it is not possible for the individual to sign the return, by any person duly authorised by him in this behalf : 1. Subs. by Act 4 of 1988, s. 166, for sub-sections (1) and (2) (w.e.f. 1-4-1989). 2. Sub-section (3) omitted by s. 166, ibid. (w.e.f. 1-4-1989). 3. Subs. by s. 167, ibid., for section 14 (w.e.f. 1-4-1989). 4. Ins. by Act 53 of 1962, s. 11 (w.e.f. 1-4-1963). 5. Subs. by Act 4 of 1988, s. 168, for clause (a) (w.e.f. 1-4-1989).
Provided that in a case referred to in sub-clause (ii) or sub-clause (iv), the person signing the return holds a valid power of attorney from the individual to do so, which shall be attached to the return ;]
in the case of a Hindu undivided family, by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family ; [(c) in the case of a company, by the managing director thereof or where for any unavoidable reason such managing director is not able to sign and verify the return, or where there is no managing director, by any director thereof : [Provided that where the company is not resident in India, the return may be signed and verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return :
Provided further that,—
where the company is being wound up, whether under the orders of the court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be signed and verified by the liquidator referred to in sub-section (1) of section 178 of the Income-tax Act ;
where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be signed and verified by the principal officer thereof ;]
in the case of a firm, by the managing partner thereof or where for any unavoidable reason such managing partner is not able to sign and verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor ;]
in the case of any other association, by any member of the association or the principal officer thereof ; and
in the case of any other person, by that person, or by some person competent to act on his behalf.] [14B. Self-assessment. — (1) Where any tax is payable on the basis of any return furnished under section 13 or under section 14 or in response to a notice under clause (i) of sub-section (4) of section 15 or under section 16, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax, together with interest payable under any provision of this Act for any delay in furnishing the return, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest.
Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable.
After the regular assessment under section 15 has been made, any amount paid under sub-section (1) shall be deemed to have been paid towards such regular assessment.
If any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub-section (1), he shall, without prejudice to any other consequences which he may 1. Subs. by Act 41 of 1975, s. 111, for clauses (c) and (d) (w.e.f. 1-4-1976). 2. The provisos added by Act 4 of 1988, s. 168 (w.e.f. 1-4-1989). 3. Ins. by s. 169, ibid. (w.e.f. 1-4-1989). incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid and all the provisions of this Act shall apply accordingly.] [(4) The provisions of this section shall apply in respect of assessment for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.] [15. Assessment. — (1) (a) Where a return has been made under section 13 or section 14 or in response to a notice under clause (i) of sub-section (4),—
if any tax or interest is found due on the basis of such return after adjustment of any amount paid by way of tax or interest, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice issued under section 31 and all the provisions of this Act shall apply accordingly ; and
if any refund is due on the basis of such return, it shall be granted to the assessee :
Provided that in computing the tax or interest payable by, or refundable to the assessee, the following adjustments shall be made in the taxable gifts declared in the return, namely :—
any arithmetical errors in the return, accounts or documents accompanying it shall be rectified;
any exemption or deduction, which, on the basis of the information available in such return, accounts or documents is prima facie admissible but which is not claimed or made in the return, shall be allowed;
any exemption or deduction claimed or made in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed: [Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments:] [ [Provided also] that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the gifts were first assessable.]
Where as a result of an order made under [sub-section (3) or sub-section (5) of this section or] section 16 or section 22 or section 23 or section 24 or section 26 or section 28 or section 34 relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there is any variation in the exemption or deduction claimed or made in the return, and as a result of which,—
if any tax or interest is found due, an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 31 and all the provisions of this Act shall apply accordingly; and
if any refund is due, it shall be granted to the assessee: 1. Ins. by Act 36 of 1989, s. 31 (w.e.f. 1-4-1989). 2. Subs. by Act 4 of 1988, s. 170, for section 15 (w.e.f. 1-4-1989). 3. Ins. by Act 36 of 1989, s. 32 (w.e.f. 1-4-1989). 4. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 5. Subs. by Act 36 of 1989, s. 32, for “provided further” (w.e.f. 1-4-1989). [(1A) (a) Where in the case of any person, the taxable gift, as a result of the adjustments made under [the first proviso] to clause (a) of sub-section (1), exceeds the taxable gift declared in the return by any amount, the Assessing Officer shall,—
Provided that an intimation for any tax or interest due under this clause shall not be sent after the expiry of four years from the end of the financial year in which any such order was passed.
further increase the amount of tax payable under sub-section (1) by an additional gift-tax calculated at the rate of twenty per cent. of the tax payable on such excess amount and specify the additional gift-tax in the intimation to be sent under sub-clause (i) of clause (a) of sub-section (1);
where any refund is due under sub-section (1), reduce the amount of such refund by an amount equivalent to the additional gift-tax calculated under sub-clause (i).
Where as a result of an order under section 22 or section 23 or section 24 or section 26 or section 28 or section 34, the amount on which additional gift-tax is payable under clause (a) has been increased or reduced, as the case may be, the additional gift-tax shall be increased or reduced accordingly, and,—
in a case where the additional gift-tax is increased, the Assessing Officer shall serve on the assessee a notice of demand under section 31;
in a case where the additional gift-tax is reduced, the excess amount paid, if any, shall be refunded.
For the purposes of this sub-section, “tax payable on such excess amount” means the difference between the tax on the taxable gift and the tax that would have been chargeable had such taxable gift been reduced by the amount of adjustments.] [(1B) Where an assessee furnishes a revised return under section 14 after the issue of an intimation, or the grant of refund, if any, under sub-section (1) of this section, the provisions of sub-sections (1) and
of this section shall apply in relation to such revised return and—
the intimation already sent for any gift-tax, additional gift-tax or interest shall be amended on the basis of the said revised return and where any amount payable by way of gift-tax, additional gift-tax or interest specified in the said intimation has already been paid by the assessee then, if any such amendment has the effect of—
enhancing the amount already paid, the intimation amended under this clause shall be sent to the assessee specifying the excess amount payable by him and such intimation shall be deemed to be a notice of demand issued under section 31 and all the provisions of this Act, shall apply accordingly;
reducing, the amount already paid, the excess amount paid shall be refunded to the assessee;
the amount of the refund already granted shall be enhanced or reduced on the basis of the said revised return and where the amount of refund already granted is—
enhanced, only the excess amount of refund due to the assessee shall be paid to him;
reduced, the excess amount so refunded shall be deemed to be the tax payable by the assessee and an intimation shall be sent to the assessee specifying the amount so payable, and such intimation shall be deemed to be a notice of demand issued under section 31 and all the provisions of this Act, shall apply accordingly: 1. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 2. Subs. by Act 36 of 1989, s. 32, for “the proviso” (w.e.f. 1-4-1989). 3. Ins. by Act 12 of 1990, s. 60 (w.e.f. 1-4-1989). gift-tax in relation to the adjustments made under the first proviso to clause (a) of sub-section (1) and specified in the said intimation, whether or not he has made the said adjustments in the revised return.]
Provided that an assessee, who has furnished a revised return under section 14 after the service upon him of the intimation under sub-section (1) of this section, shall be liable to pay additional
[Where a return has been made under section 13 or section 14 or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he] considers it necessary or expedient to ensure that the assessee has not omitted to disclose any taxable gift or has not understated the amount or value of any such gift or has not under-paid the tax in any manner, [serve on the assessee] a notice requiring him, on a date to be specified therein, either to attend at the office of the Assessing Officer or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return : [Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.]
On the date specified in the notice issued under sub-section (2) or, as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by order in writing, assess the value of taxable gifts made by the assessee and determine the sum payable by him on the basis of such assessment.
For the purposes of making an assessment under this Act, the Assessing Officer may serve, on any person who has made a return under section 13 or section 14 or in whose case the time allowed under sub-section (1) of section 13 for furnishing the return has expired, a notice requiring him, on a date to be specified therein,—
where such person has not made a return [within the time allowed under sub-section (1) of section 13], to furnish a return of the taxable gifts made by him or of the taxable gifts made by any other person in respect of which he is assessable under this Act during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or
to produce or cause to be produced such accounts, records or other documents as the Assessing Officer may require.
If any person,—
fails to make the return required under sub-section (1) of section 13 and has not made a return or a revised return under section 14, or
fails to comply with all the terms of a notice issued under sub-section (2) or sub-section (4), the Assessing Officer, after taking into account all relevant material which he has gathered, shall, after giving such person an opportunity of being heard, estimate the value of taxable gifts to the best of his judgment and determine the sum payable by such person on the basis of such assessment : 1. Subs. by Act 36 of 1989, s. 32, for “In a case referred to in sub-section (1), if the Assessing Officer” (w.e.f. 1-4-1989). 2. Subs. by s. 32, ibid., for “he shall serve on the assessee” (w.e.f. 1-4-1989). 3. Subs. by Act 49 of 1991, s. 86, for the proviso (w.e.f. 1-10-1991). 4. Subs. by Act 12 of 1990, s. 60, for “before the end of the relevant assessment year” (w.e.f. 1-4-1990).
Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the person to show cause on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment:
Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (4) has been issued prior to the making of the assessment under this sub-section.
Notwithstanding anything contained in section 6, for the purpose of making an assessment under this Act, [where under the provisions of section 6 read with Schedule II, the fair market value of any property transferred by way of gifts is to be taken into account in such assessment,] the Assessing Officer may refer the valuation of such property to the Valuation Officer,—
in a case where the value of the property as returned is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so returned is less than its fair market value ;
in any other case, if the Assessing Officer is of opinion—
that the fair market value of the property exceeds the value of the property as returned by more than such percentage of the value of the property as returned or by more than such amount as may be prescribed in this behalf; or
that having regard to the nature of the property and other relevant circumstances, it is necessary so to do, and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act.
In this sub-section, “Valuation Officer” has the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957).] [(7) Where a regular assessment under sub-section (3) or sub-section (5) is made,—
any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessments;
if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.
The provisions of this section, except those of sub-section (6), as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.] [Explanation.—An intimation sent to the assessee under sub-section (1) or sub-section (1B) shall be deemed to be an order for the purposes of sub-section (1) of section 24.]
16. Gift escaping assessment
[(1) If the Assessing Officer [has reasons to believe] that the taxable gifts in respect of which any person is assessable under this Act, (whether made by him or by any other person) have escaped assessment for any assessment year (whether by reason of under-assessment 1. Ins. by Act 3 of 1989, s. 83 (w.e.f. 1-4-1989). 2. Ins. by Act 36 of 1989, s. 32 (w.e.f. 1-4-1989). 3. Ins. by Act 49 of 1991, s. 86 (w.e.f. 1-10-1991). 4. Subs. by Act 4 of 1988, s. 171, for sub-section (1) (w.e.f. 1-4-1989). 5. Subs. by Act 3 of 1989, s. 84, for “for reasons to be recorded by him in writing, is of the opinion” (w.e.f. 1-4-1989). javascript:ShowFootnote('ftn138dtmdiv6chp7'); or assessment at too low a rate or otherwise), he may, subject to the other provisions of this section and section 16A, serve on such person a notice requiring him to furnish within such period, *** as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth the taxable gifts made by him or by such other person during the previous year mentioned in the notice, in respect of which he is assessable, along with such other particulars as may be required by the notice, and may proceed to assess or re-assess such gifts and also any other taxable gifts in respect of which such person is assessable, which have escaped assessment and which come to his notice subsequently in the course of the proceedings under this section for the assessment year concerned (hereafter in this section referred to as the relevant assessment year); and the provisions of this Act shall, so far as may be, apply as if the return were a return required under section 13 :
Provided that where an assessment under sub-section (3) of section 15 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any taxable gift chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 13 or section 14 or in response to a notice issued under sub-section (4) of section 15 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year : [Provided further that the Assessing Officer shall, before issuing any notice under this sub-section, record his reasons for doing so.]
Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.
No notice under sub-section (1) shall be issued for the relevant assessment year,—
in a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for such assessment year,—
if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii);
if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year;
if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year;
in any other case,—
if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii) ;
if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year ; 1. The words “not being less than thirty days” omitted by the Act 32 of 2003, s. 101, (w.e.f. 1-4-1989). 2. Ins. by Act 3 of 1989, s. 84 (w.e.f. 1-4-1989).
if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the value of taxable gifts chargeable to tax which have escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year.
For the purposes of sub-section (1) and sub-section (1A), the following shall also be deemed to be cases where taxable gifts chargeable to tax have escaped assessment, namely :—
where no return of taxable gifts has been furnished by the assessee although the taxable gifts made by him or the taxable gifts made by any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to gift-tax;
where return of taxable gifts has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the amount or value of the taxable gifts or has claimed excessive exemption or deduction in the return.
(a) In a case where an assessment under sub-section (3) of section 15 or sub-section (1) of this section has been made for the relevant assessment year, no notice shall be issued under sub-section (1) [by an Assessing Officer, who is below the rank of [Assistant Commissioner or Deputy Commissioner], unless the [Joint Commissioner] is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice] :
Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice.
In a case, other than a case falling under clause (a), no notice shall be issued under sub-section (1) by an Assessing Officer, who is below the rank of [Joint Commissioner], after the expiry of four years from the end of the relevant assessment year, unless the [Joint Commissioner], is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.]
Nothing contained in this section limiting the time within which any proceedings for assessment or reassessment may be commenced shall apply to an assessment or reassessment to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28 [or by a court in any proceedings under any other law]. [16A. Time limit for completion of assessment and re-assessment. — [(1) No order of assessment shall be made under section 15 at any time after the expiry of [two years] from the end of the assessment year in which the gifts were first assessable : [Provided that,—
where the gifts were first assessable in the assessment year commencing on the 1st day of April, 1987, or any earlier assessment year, such assessment may be made on or before the 31st day of March, 1991;
where the gifts were first assessable in the assessment year commencing on the 1st day of April, 1988, such assessment may be made on or before the 31st day of March, 1992.] 1. Subs. by Act 12 of 1990, s. 61, for “except by an Assessing Officer of the rank of Assistant Commissioner or Deputy Commissioner” (w.e.f. 1-4-1990). 2. Subs. by Act 21 of 1998, s. 76, for “Assistant Commissioner” (w.e.f. 1-10-1998). 3. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 4. Added by Act 4 of 1988, s. 171 (w.e.f. 1-4-1989). 5. Ins. by Act 41 of 1975, s. 112 (w.e.f. 1-10-1975). 6. Subs. by Act 4 of 1988, s. 172, for sub-section (1) and (2) (w.e.f. 1-4-1989). 7. Subs. by Act 13 of 1989, s. 31, for “one year” (w.e.f. 1-4-1989). 8. Subs. by s. 31, ibid., for the proviso (w.e.f. 1-4-1989).
No order of assessment or re-assessment shall be made under section 16 after the expiry of two years from the end of the financial year in which the notice under sub-section (1) of that section was served :
Provided that,—
where the notice under clause (a) of sub-section (1) of section 16 was served during the financial year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, such assessment or re-assessment may be completed on or before the 31st day of March, 1990 ;
where the notice under clause (b) of sub-section (1) of section 16 relates to the assessment for the assessment year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, such assessment or re-assessment may be completed on or before the 31st day of March, 1990, or the expiry of two years from the end of the financial year in which such notice was served, whichever is later.
References to section 16 in the proviso shall be construed as references to that section as it stood before its amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988).]
Notwithstanding anything contained in sub-sections (1) and (2), an order of fresh assessment in pursuance of an order passed on or after the 1st day of April, 1975, under section 22, section 23 or section 24, setting aside or cancelling an assessment, may be made at any time before the expiry of [two years] from the end of the financial year in which the order under section 22 or section 23 is received by the [Chief Commissioner or Commissioner] or, as the case may be, the order under section 24 is passed by the Commissioner : [Provided that where the order setting aside or cancelling the assessment was passed during the financial year commencing on the 1st day of April, 1985, or the 1st day of April, 1986, the order of fresh assessment may be made on or before the 31st day of March, 1990.]
The provisions of sub-sections (1) and (2) shall not apply to the assessment or re-assessment made on the assessee in consequence of, or to give effect to, any finding or direction contained in an order under section 22, section 23, section 24, section 26 or section 28 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act and such assessment or re- assessment may, subject to the provisions of sub-section (3), be completed at any time.
In computing the period of limitation for the purposes of this section—
the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be reheard under the proviso to section 38, or
the period during which the assessment proceeding is stayed by an order or injunction of any court, shall be excluded: [Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (2) and (3) available to the Assessing Officer for making an order of assessment or re-assessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.] 1. Subs. by Act 4 of 1988, s. 172, for “four years” (w.e.f. 1-4-1989). 2. Subs. by s. 161, ibid., for “Commissioner” (w.e.f. 1-4-1988). 3. The proviso ins. by s. 171, ibid. (w.e.f. 1-4-1989). 4. The proviso ins. by Act 49 of 1991, s. 87 (w.e.f. 27-9-1991).
Where, by an order referred to in sub-section (4), any gift is excluded from the taxable gifts for an assessment year in respect of an assessee, then, an assessment of such gift for another assessment year shall, for the purposes of sub-section (2) of section 16 and this section, be deemed to be one made in consequence of, or to give effect to, any finding or direction contained in the said order.] [16B. Interest for defaults in furnishing return of gifts. — (1) Where a return of gifts for any assessment year under sub-section (1) of section 13 or section 14, or in response to a notice under clause (i) of sub-section (4) of section 15, is furnished after the 30th day of June of such year, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the 1st day of July of the assessment year, and,—
where the return is furnished after the 30th day of June ending on the date of furnishing of the return; or
where no return has been furnished, ending on the date of completion of the assessment under sub-section (5) of section 15, on the amount of tax payable on the taxable gifts as determined [under sub-section (1) of section 15 or] on regular assessment. [Explanation 1.—In this sub-section, “tax payable on the taxable gifts as determined under sub-section (1) of section 15” shall not include the additional gift-tax, if any, payable under section 15.]
Where in relation to an assessment year the assessment is made for the first time under section 16, the assessment so made shall be regarded as a regular assessment for the purposes of this section. [Explanation 3.—In this sub-section, “tax payable on the taxable gifts as determined under sub-section (1) of section 15 or on regular assessment” shall, for the purposes of computing the interest payable under section 14B, be deemed to be tax payable on the taxable gifts as declared in the return.]
The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 14B towards the interest chargeable under this section.
Where the return of gifts for any assessment year, required by a notice under sub-section (1) of section 16 issued [after the determination of taxable gifts under sub-section (1) of section 15 or] after the completion of an assessment under sub-section (3) or sub-section (5) of section 15 or section 16, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of two per cent. for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,—
where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or
where no return has been furnished, ending on the date of completion of the re-assessment under section 16, on the amount by which the tax on the taxable gifts determined on the basis of such re-assessment exceeds the tax on the taxable gifts as determined [under sub-section (1) of section 15 or] on the basis of the earlier assessment aforesaid. * * * * * 1. Ins. by Act 4 of 1988, s. 173 (w.e.f. 1-4-1989). 2. Ins. by Act 3 of 1989, s. 85 (w.e.f. 1-4-1989). 3. Subs. by s. 85, ibid., for Explanation 1 (w.e.f. 1-4-1989). 4. The Explanation omitted by s. 85, ibid, (w.e.f. 1-4-1989).
Where, as a result of an order under section 22 or section 23 or section 24 or section 26 or section 28 or section 34, the amount of tax on which interest was payable under this section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and,—
in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under section 31 and the provisions of this Act shall apply accordingly, and
in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.
The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.] [17. Penalty for failure to furnish returns, to comply with notices and concealment of gifts, etc.— (1) If the [Assessing Officer], [Deputy Commissioner (Appeals)], [Commissioner (Appeals),] [Chief Commissioner or Commissioner] or Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person— * * * * *
has *** failed to comply with a notice under sub-section (2) or sub-section (4) of section 15; or
has concealed the particulars of any gift or deliberately furnished inaccurate particulars thereof, he or it may, by order in writing, direct that such person shall pay by way of penalty— * * * * * [(ii) in the cases referred to in clause (b), in addition to the amount of gift-tax payable by him, a sum which shall not be less than one thousand rupees, but which may extend to twenty-five thousand rupees for each such failure;]
in the cases referred to in clause (c), in addition to any gift-tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and half times the amount of the tax, if any, which would have been avoided if the return made by such person had been accepted as correct: [Provided that in the cases referred to in clause (b), no penalty shall be imposable if the person proves that there was a reasonable cause for the failure referred to in that clause.] [Explanation.—Where any adjustment is made in the taxable gifts declared in the return under the proviso to clause (a) of sub-section (1) of section 15 and additional gift-tax charged under that section, the provisions of this sub-section shall not apply in relation to the adjustments so made.] 1. Subs. by Act 53 of 1962, s. 14, for Section 17 (w.e.f. 1-4-1963). 2. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 3. Subs. by s. 161, ibid., for “Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 4. Ins. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 5. Subs. by Act 4 of 1988, s. 161, for “Commissioner” (w.e.f. 1-4-1988). 6. Clause (a) omitted by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). 7. The words “without reasonable cause” omitted by Act 46 of 1986, s. 40 (w.e.f. 10-9-1986). 8. Clause (i) omitted by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). 9. Subs. by s. 86, ibid., for clause (ii) (w.e.f. 1-4-1989). 10. Subs. by s. 86, ibid., for the proviso (w.e.f. 1-4-1989). 11. Ins. by s. 86, ibid. (w.e.f. 1-4-1989). javascript:ShowFootnote('ftn170dtmdiv6chp7');
No order imposing a penalty under sub-section (1) shall be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. [(3) No order imposing a penalty under sub-section (1) shall be made,—
by the Income-tax Officer, where the penalty exceeds ten thousand rupees;
by the [Assistant Commissioner or Deputy Commissioner] where the penalty exceeds twenty thousand rupees, except with the prior approval of the [Joint Commissioner.]
A [Deputy Commissioner (Appeals)], [a Commissioner (Appeals), a [Chief Commissioner or Commissioner] or the Appellate Tribunal] on making an order under this section imposing a penalty, shall forthwith send a copy of the same to the [Assessing Officer].] [(5) No order imposing a penalty under this section shall be passed—
in a case where the assessment to which the proceedings for imposition of penalty relate is the subject-matter of an appeal to the Deputy Commissioner (Appeals) or Commissioner (Appeals) under section 22 or an appeal to the Appellate Tribunal under sub-section (2) of section 23, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Deputy Commissioner (Appeals) or the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever is later;
in a case where the relevant assessment is the subject-matter of revision under sub-section (2) of section 24, after the expiry of six months from the end of the month in which such order of revision is passed;
in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.
In computing the period of limitation for the purposes of this section,—
the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 38; and
any period during which a proceeding under this section for the levy of penalty is stayed by an order or injunction of any court, shall be excluded.
The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1989 (3 of 1989) shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in 1. Subs. by Act 3 of 1989, s. 86, for sub-section (3) (w.e.f. 1-4-1989). 2. Subs. by Act 21 of 1998, s. 76, for “Assistant Commissioner” (w.e.f. 1-10-1998). 3. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 4. Subs. by Act 4 of 1988, s. 161 for “An Appellate Assistant Commissioner” (w.e.f. 1-4-1988). 5. Subs. by Act 29 of 1977, s. 39 and the Fifth Schedule (w.e.f. 10-7-1978). 6. Subs. by Act 4 of 1988, s. 161 for “Commissioner” (w.e.f. 1-4-1988). 7. Subs. by s. 161, ibid., “Gift-tax Officer” (w.e.f. 1-4-1988). 8. Ins. by Act 3 of 1989, s. 86 (w.e.f. 1-4-1989). this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.] [17A. Penalty for failure to answer questions, sign statements, furnish information, allow inspections, etc. — (1) If a person,—
being legally bound to state the truth of any matter touching the subject of his assessment, refuses to answer any question put to him by a gift-tax authority in the exercise of his powers under this Act; or
refuses to sign any statement made by him in the course of any proceedings under this Act, which a gift-tax authority may legally require him to sign; or
to whom a summons is issued under sub-section (1) of section 36, either to attend to give evidence or produce books of account or other documents at a certain place and time, omits to attend or produce the books of account or documents at the place and time, he shall pay, by way of penalty, a sum which shall not be less than five hundred rupees but which may extend to ten thousand rupees for each such default or failure :
Provided that no penalty shall be imposable under clause (c) if the person proves that there was reasonable cause for the said failure.
If a person fails to furnish in due time any statement or information which such person is bound to furnish to the Assessing Officer under section 37, he shall pay, by way of penalty, a sum which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which the failure continues :
Provided that no penalty shall be imposable under this sub-section if the person proves that there was reasonable cause for the said failure.
Any penalty imposable under sub-section (1) or sub-section (2) shall be imposed—
in a case where the contravention, failure or default in respect of which such penalty is imposable occurs in the course of any proceeding before a gift-tax authority not lower in rank than a [Joint Director] or a [Joint Commissioner], by such gift-tax authority;
in any other case, by the [Joint Director] or the [Joint Commissioner].
No order under this section shall be passed by any gift-tax authority referred to in sub-section (3) unless the person on whom penalty is proposed to be imposed has been heard or has been given a reasonable opportunity of being heard in the matter by such authority. 1. Subs. by Act 3 of 1989, s. 87, for section 17A (w.e.f. 1-4-1989). 2. Subs. by Act 21 of 1998, s. 76, for “Deputy Director” (w.e.f. 1-10-1998). 3. Subs. by s. 76, ibid., for “Deputy Commissioner” (w.e.f. 1-10-1998). 4. Subs. by s. 76, ibid., for “Assistant Director” (w.e.f. 1-10-1998). 5. Subs. by Act 41 of 1975, s. 115, for section 18 (w.e.f. 1-4-1976). specified in the Schedule [or at the rate specified in sub-section (2) of section 3], he shall, at the time of assessment under section 15, be given credit—
In this section, “gift-tax authority” includes a Director General, Director, [Joint Director], [Assistant Director or Deputy Director] or Valuation Officer while exercising the powers vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the matters specified in sub-section (1) of section 36.] [18. Rebate on advance payments. — If a person making a taxable gift pays into the treasury within fifteen days of his making the gift any part of the amount of tax due on the gift calculated at rates
for the amount so paid; and
for a sum equal to one-ninth of the amount so paid, so however, that such sum shall in no case exceed one-tenth of the tax due on the gift.
If a person makes more than one taxable gift in the course of a previous year, the amount of tax due on any one of such gifts shall be the difference between the total amount of tax due on the aggregate value of all the taxable gifts so far made, including the taxable gift in respect of which tax has to be paid, calculated at the rates specified in the Schedule or, as the case may be [at the rate specified in sub-section (2) of section 3], and the total amount of tax on the aggregate value of all the gifts made during that year, excluding the taxable gift in respect of which tax has to be paid, calculated at the rates specified in the Schedule or, as the case may be, [at the rate specified in sub-section (2) of section 3].] [18A. Credit for stamp duty paid on instrument of gift. — Where any stamp duty has been paid under any law relating to stamp duty in force in any State on an instrument of gift of property, the assessee shall be entitled to a deduction from the gift-tax payable by him of an amount equal to the stamp duty so paid or one-half of the gift-tax payable, before making the deduction under this section, whichever is less.] * * * * *
Chapter VLIABILITY TO ASSESSMENT IN SPECIAL CASES
19. Tax of deceased person payable by legal representative
Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the gift-tax determined as payable by such person, or any sum which would have been payable by him under this Act if he had not died.
Where a person dies without having furnished a return under section 13, or after having furnished a return which the [Assessing Officer] has reason to believe to be incorrect or incomplete, the [Assessing Officer] may make an assessment of the value of the taxable gifts made by such person and determine the gift-tax payable by him, and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person if he had survived, require from the executor, administrator, or other legal representative of the deceased person any accounts, documents, or other evidence which might, under the provisions of section 15, have been required from the deceased person.
The provisions of sections 13, 14 and 16 shall apply to an executor, administrator or other legal representative as they apply to any person referred to in [those sections]. 1. Subs. by Act 23 of 1986, s. 44, for “or, in case where the provisions of Section 6-A are applicable to a gift, in the manner specified in that section” (w.e.f. 1-4-1987). 2. Subs. by s. 44, ibid., for “in the manner specified in section 6A” (w.e.f. 1-4-1987). 3. Subs, by Act 14 of 1982, s. 39 for section 18A (w.e.f. 1-4-1983). 4. Chapter IV-A containing section 18-B” omitted by Act 3 of 1989, s. 95 (w.e.f. 1-4-1989). Earlier it was inserted by Act 4 of 1988, s. 175 (w.e.f. 1-4-1989). 5. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 6. Subs. by Act 58 of 1960, s. 3 and the Second Schedule, for “that section” (w.e.f. 26-12-1960). [19A. Assessment of persons leaving India. — (1) Notwithstanding anything contained in section 3, when it appears to the [Assessing Officer] that any individual may leave India during the current assessment year, or shortly after its expiry and that he has no present intention of returning to India, the gifts made by such individual during the period from the expiry of the previous year for that assessment year up to the probable date of his departure from India, shall be chargeable to gift-tax in that assessment year.
The taxable gifts made in each completed previous year or part of any previous year included in such period shall be chargeable to gift-tax at the rate or rates specified in the Schedule [or, as the case may be, at the rate specified in sub-section (2) of section 3], and separate assessment shall be made in respect of each such completed previous year or part of any previous year.
The [Assessing Officer] may estimate the value of the gifts made by such individual during such period or any part thereof, where it cannot be readily determined in the manner provided in this Act.
For the purpose of making an assessment under sub-section (1), the [Assessing Officer] may serve a notice upon such individual requiring him to furnish, within such time, not being less than seven days, as may be specified in the notice, a return in the same form and verified in the same manner as [a return under sub-section (1) of section 13], giving particulars of the gifts made by him during each completed previous year comprised in the period referred to in sub-section (1) and during any part of the previous year comprised in that period; and the provisions of this Act shall, so far as may be, and subject to the provisions of this section, apply [as if the notice were a notice issued under clause (i) of sub-section (4) of section 15].
The gift-tax chargeable under this section shall be in addition to the tax, if any, chargeable under any other provision of this Act.
Where the provisions of sub-section (1) are applicable, any notice issued by the [Assessing Officer] under [clause (i) of sub-section (4) of section 15] or under section 16 in respect of any gift-tax chargeable under any other provisions of this Act may, notwithstanding anything contained in [clause (i) of sub-section (4) of section 15], or section 16, as the case may be, require the furnishing of the return by such individual within such period, not being less than seven days, as the [Assessing Officer] may think proper.]
20. Assessment after partition of a Hindu undivided family
Where, at the time of making an assessment, it is brought to the notice of the [Assessing Officer] that a partition has taken place among the members of a Hindu undivided family, and the [Assessing Officer], after enquiry, is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions, he shall record an order to that effect and he shall make assessments [on the value of the taxable gifts] made by the family as such as if no partition had taken place and each member or group of members shall be liable jointly and severally for the tax assessed on the value of the taxable gifts made by the joint family as such.
Where the [Assessing Officer] is not so satisfied, he may, by order, declare that such family shall be deemed for the purposes of this Act to continue to be a Hindu undivided family. 1. Ins. by Act 53 of 1962, s. 15 (w.e.f. 1-4-1963). 2. Subs. by Act 4 of 1988, s. 161, for “Gift-tax Officer” (w.e.f. 1-4-1988). 3. Ins. by Act 23 of 1986, s. 45 (w.e.f. 1-4-1987). 4. Subs. by Act 4 of 1988, s. 186, for “a return under sub-section (2) of section 13” (w.e.f. 1-4-1989). 5. Subs. by s. 186, ibid., for “as if the notice were a notice issued under sub-section (2) of section 13” (w.e.f. 1-4-1989). 6. Subs. by s. 186, ibid., for “sub-section (2) of section 13” (w.e.f. 1-4-1989). 7. Subs. by Act 58 of 1960, s. 3 and the Second Schedule, for “on the amount of taxable gifts” (w.e.f. 26-12-1960).
21. Liability in case of discontinued firm or association of persons
Where a firm or association of persons liable to pay gift-tax has been discontinued or dissolved, the [Assessing Officer] shall determine the gift-tax payable by the firm or association of persons as such as if no such discontinuance or dissolution had taken place.
If the [Assessing Officer], the [Deputy Commissioner (Appeals)], [the Commissioner (Appeals)] or the Appellate Tribunal in the course of any proceeding under this Act in respect of any such firm or other association of persons as is referred to in sub-section (1) is satisfied that the firm or association is guilty of any of the acts specified in clause (a) or clause (b) or clause (c) of sub-section (1) of section 17, he or it may impose or direct the imposition of a penalty in accordance with the provisions of that section.
Every person who was at the time of such discontinuance or dissolution a partner of the firm or a member of the association, as the case may be, shall be jointly and severally liable for the amount of tax or penalty payable, and all the provisions of Chapter VII, so far as may be, shall apply to any such assessment or imposition of penalty. [21A. Assessment of donee when the donor cannot be found. — (1) Where an [Assessing Officer] after using all due and reasonable diligence cannot find the donor who had made any taxable gifts, for the purpose of service of notice under sub-section (2) of section 13 or under section 16, the [Assessing Officer] may make an assessment of the value of all such taxable gifts made by him and determine the gift-tax payable by him and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the donor, require from the donee or donees any accounts, documents or other evidence which might, under the provisions of section 15, have been required from the donor.
Where any assessment in respect of the taxable gifts made by the donor has been made under sub- section (1), every donee shall be liable for the gift-tax so assessed :
Provided that where the donees are more than one, they shall be jointly and severally liable for the amount of the gift-tax so assessed :
Provided further that the amount of the gift-tax which may be recovered from each donee shall not exceed the value of the gift made to him as on the date of the gift.
The provisions of sections 13, 14 and 16 shall apply to a donee as they apply to any person referred to in those sections.]
Chapter VIAPPEALS, REVISIONS AND REFERENCES
22. Appeal to the [ Deputy Commissioner (Appeals)] from orders of [Assessing Officer]
[Subject to the provisions of sub-section (1A), any person,]—
objecting to the value of * * * taxable gifts determined under this Act; or
objecting to the amount of gift-tax determined as payable by him under this Act; or
denying his liability to be assess
Schedule I
2[I]
3[[See section 3(1)]]
RATES OF GIFT-TAX
(1) where the value of all taxable gifts does not exceed Rs. 20,000
5 per cent. of the value of such gifts;
(2) where the value of all taxable gifts exceeds
Rs. 20,000 but does not exceed Rs. 50,000
Rs. 1,000 plus 10 per cent. of the amount by which the value of such gifts exceeds Rs. 20,000;
(3) where the value of all taxable gifts exceeds
Rs. 50,000 but does not exceed Rs. 1,00,000
Rs. 4,000 plus 15 per cent. of the amount by which the value of such gifts exceeds Rs. 50,000;
(4) where the value of all taxable gifts exceeds
Rs. 1,00,000 but does not exceed
Rs. 2,00,000
Rs. 11,500 plus 20 per cent. of the amount by which the value of such gifts exceeds Rs. 1,00,000;
(5) where the value of all taxable gifts exceeds
Rs. 2,00,000 but does not exceed
Rs. 5,00,000
Rs. 31,500 plus 25 per cent. of the amount by which the value of such gifts exceeds Rs. 2,00,000;
(6) where the value of all taxable gifts exceeds
Rs. 5,00,000 but does not exceed
Rs. 10,00,000
Rs. 1,06,500 plus 30 per cent. of the amount by which the value of such gifts exceeds Rs. 5,00,000;
(7) where the value of all taxable gifts exceeds
Rs. 10,00,000 but does not exceed
Rs. 15,00,000
Rs. 2,56,500 plus 40 per cent. of the amount by which the value of such gifts exceeds Rs. 10,00,000;
(8) where the value of all taxable gifts exceeds
Rs. 15,00,000 but does not exceed
Rs. 20,00,000
Rs. 4,56,500 plus 50 per cent. of the amount by which the value of such gifts exceeds Rs. 15,00,000;
(9) where the value of all taxable gifts exceeds
Rs. 20,00,000
Rs. 7,06,500 plus 75 per cent. of the amount by which the value of such gifts exceeds Rs. 20,00,000.]
Amendment notes (3)
- 1Subs. by Act 19 of 1970, s. 27, for the Schedule (w.e.f. 1-4-1971).
- 2The Schedule renumbered as the Schedule (1) thereof by Act 3 of 1989, s. 94 (w.e.f. 1-4-1989).
- 3Subs. by Act 23 of 1986, s. 46, for ―(See section 3)‖ (w.e.f. 1-4-1987).
Schedule II
[See section 6(1)]
RULES FOR DETERMINING THE VALUE OF PROPERTY GIFTED
1. Value of gifted property, how to be determined. —
2[Subject to the provisions of rules 2 to 7, the value of any property], other than cash, transferred by way of gift shall, for the purposes of this Act, be determined in accordance with the provisions of Schedule III to 3[the Wealth-tax Act, 1957 (27 of 1957)
(hereinafter referred to as the Wealth-tax Act)], which shall apply subject to the following modifications, namely :—
In the said Schedule,—
(a) references by whatever form of words to the Wealth-tax Act shall be construed as references to this Act ;
(b) in rule 5, the reference to the year ending on the valuation date shall be construed as a reference to the previous year as defined in this Act;
(c) save as provided in clause (b), references to the valuation date shall be construed as references to the date on which the gift was made ;
(d) reference to section 7 of the Wealth-tax Act shall be construed as references to section 6 of this Act ;
(e) references to section 16A of the Wealth-tax Act shall be construed as references to sub-section (6) of section 15 of this Act.]
4[2. Quoted shares and debentures of companies. — The value of an equity share or a preference share in any company or a debenture of any company which is a quoted share or a quoted debenture shall be taken as the value quoted in respect of such share or debenture on the date on which the gift was made or where there is no such quotation on such date, the quotation on the date closest to such date and immediately preceding such date.
Explanation.—The words and expressions used in this rule and rules 3 to 7 but not defined and defined in rule 2 of Schedule III to the Wealth-tax Act shall have the meanings respectively assigned to them in rule 2 of that Schedule.
3. Special provision for quoted shares of companies. — Notwithstanding anything in rule 2, the value of an equity share in any company which is a quoted share may, at the option of the assessee or a company, be taken on the basis of the average of the value quoted on the 31st day of March immediately preceding the assessment year and the values quoted in respect of such share on the said dates in relation to each of the immediately preceding nine assessment years, or where there is no such quotation on any of the aforesaid dates, the quotation on the date closest to the said date and immediately preceding such date :
Provided that where for any reason the value of such share is quoted in relation to lesser number of assessment years than the said nine assessment years, then the value or values so quoted shall be taken into account for the purposes of the aforesaid average:
Provided further that where the assessee opts for the average of the values so quoted, he shall get such values certified by an accountant and attach the certificate to the return of gifts in respect of the relevant assessment year.
Explanation.—For the purposes of this rule, ―accountant‖ shall have the same meaning as in the Explanation below sub-section (2) of section 288 of the Income-tax Act.
4. Unquoted preference shares. — (1) Subject to the provisions of sub-rule (2), the value of an unquoted preference share in any company shall,—
(a) where the preference share is issued before the date on which the gift was made at a rate of dividend of not less than eight per cent. be the paid-up value of such share; and
(b) where the preference share is issued before the said date at a rate of dividend of less than eight per cent. be the adjusted paid-up value of such share.
(2) Where no dividend has been paid in respect of an unquoted preference share by any company continuously for not less than three accounting years ending on the date on which the gift was made or, in a case where the accounting year of the company does not end on that date, for not less than three continuous accounting years ending on a date immediately before the date on which the gift was made, the paid-up value or, as the case may be, the adjusted paid-up value shall be reduced—
(a) in the case of a non-cumulative preference share, as indicated in the Table below :
TABLE
Number of accounting years ending on the date on which the gift was made or, in a case where the accounting year does not end on that date, the number of accounting years ending on a date immediately preceding the date on which the gift was made, for which no dividend has been paid
Rate of reduction
(1) (2)
Three Years 10% of the paid-up value or the adjusted paid-up value, as the case may be; Four Years 20%
Five Years 30%
Six Years and above 40%
(b) in the case of a cumulative preference share, by one-half of the rates specified in the aforesaid
Table.
Explanation.—For the purposes of this rule, ―adjusted paid-up value‖, in relation to a preference share, means an amount which bears to the paid-up value of the preference share the same proportion as the stipulated rate of dividend [being the rate of dividend on the preference share specified in the terms of issue of such share, and in a case where such dividend is required to be increased under the provisions of section 3 of the Preference Shares (Regulation of Dividends) Act, 1960 (63 of 1960), the rate of dividend as so increased] on such share bears to the rate of eight per cent.
5. Unquoted equity shares in companies other than investment companies. — (1) The value of an unquoted equity share in any company, other than an investment company, shall be determined in the manner set out in sub-rule (2).
(2) The value of all the liabilities as shown in the balance sheet of such company shall be deducted from the value of all its assets shown in that balance sheet; the net amount so arrived at shall be divided by the total amount of its paid-up equity share capital as shown in the balance sheet ; the result multiplied by the paid-up value of each equity share shall be in the break-up value of each unquoted equity share, and an amount equal to eighty per cent. of the break-up value so determined shall be the value of the unquoted equity share for the purposes of this Act.
(3) For the purposes of sub-rule (2),—
(a) the following amounts shown as assets in the balance sheet shall not be treated as assets, namely :—
(i) any amount paid as advance tax under the Income-tax Act;
(ii) any amount shown in the balance sheet including the debit balance of the profit and loss account or the profit and loss appropriation account which does not represent the value of any asset ;
(b) the following amounts shown as liabilities in the balance sheet shall not be treated as liabilities, namely :—
(i) the paid-up capital in respect of equity shares;
(ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date on which the gift was made at a general body meeting of the company ;
(iii) reserves, by whatever name called, other than those set apart towards depreciation ;
(iv) credit balance of the profit and loss account ;
(v) any amount representing provision for taxation, other than the amount referred to in sub-clause (i) of clause (a), to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.
Explanation.—For the purposes of this rule, ―balance sheet‖, in relation to any company, means the balance sheet of such company (including the Notes annexed thereto and forming part of the accounts) as drawn up on the date on which the gift was made and, where there is no such balance sheet, the balance sheet drawn up on a date immediately preceding that date, and, in the absence of both, the balance sheet drawn up on a date immediately after the date on which the gift was made.
6. Unquoted equity shares in investment companies. (1) Subject to rule 7, the value of an unquoted equity share in an investment company shall be determined in the manner specified in sub-rule (2).
(2) The value of all the liabilities as shown in the balance sheet of such company shall be deducted from the value of all its assets shown in that balance sheet ; the net amount so arrived at shall be divided by the total paid-up equity share capital of the company as shown in the balance sheet, and the result multiplied by the paid-up value of each equity share shall be the value of the unquoted equity share in that investment company for the purposes of this Act.
(3) For the purposes of sub-rule (2), the value of an asset disclosed in the balance sheet of the company shall be taken to be its value determined in accordance with the rules as applicable to that particular asset and, in the absence of any such rule, the value of such asset shall be its value as determined under rule 20 of Schedule III to the Wealth-tax Act.
(4) For the purposes of this rule,—
(a) ―balance sheet‖ has the same meaning as in rule 5;
(b) the amounts referred to in sub-rule (3) of rule 5 shall not be treated as assets or liabilities.
(5) For the purpose of facilitating the valuation of unquoted equity shares under this rule and rule 7, the company concerned shall have such valuation made by its auditors appointed under section 224 of the Companies Act, 1956 (1 of 1956), and a certificate of the auditors relating to such valuation in the prescribed form shall be furnished to the Assessing Officer and the shareholders of the company; and the valuation made by the auditors shall be taken into account in the assessment of the shareholders of the company.
7. Unquoted equity shares in interlocked companies. — (1) The value of an unquoted equity share in one of the two interlocked companies held by the other interlocked company for the purposes of rule 6 shall be equal to the paid-up value of such share or the value determined under sub-rule (2), whichever is higher.
(2) For the purpose of sub-rule (1), the aggregate value of all the equity shares in an interlocked company shall be arrived at by multiplying the maintainable profits of such company by—
(a) the fraction 100/8.5, in a case where the gross total income of the company consists, to the extent of not less than 51 per cent. of income chargeable under the head ―Income from house property‖ under the Income-tax Act ; or
(b) the fraction 100/10, in the case of any other interlocked company, and the resultant amount divided by the number of such equity shares shall be the value of such an equity share in such company.
(3) The maintainable profits of the company, for the purpose of sub-rule (2), shall be computed in the following manner, namely :—
(a) the book profits of the company for the five accounting years of the company immediately preceding the date on which the gift was made shall first be ascertained ;
(b) adjustments shall be made to the book profits for each of the said five years for all non- recurring and extraordinary items of income and expenditure and losses ;
(c) adjustments shall be made to the book profits for expenditure which is not of a revenue nature but is debited in the accounts and for receipts which are in the nature of revenue receipts but are not accounted for in the profit and loss account ;
(d) any development rebate or investment allowance debited in the books of account shall be added back to the book profits ;
(e) the tax liability of the company on the book profits, arrived at after the adjustments at items (a), (b), (c) and (d), shall be deducted from such book profits ;
(f) amounts required for paying dividends on preference share or shares with prior rights shall be deducted from such book profits;
(g) the aggregate of the book profits for the five accounting years so arrived at, divided by 5, shall be the maintainable profits of the company.
Explanation.—For the purposes of this rule, ―interlocked companies‖ means any two investment companies each of which holds shares in the other company.]
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Amendment notes (4)
- 1Ins. by Act 3 of 1989, s. 94 (w.e.f. 1-4-1989).
- 2Subs. by Act 38 of 1993, s. 42, for ―The value of property‖ (w.e.f. 1-4-1993).
- 3Subs. by s. 42, ibid., for ―the Wealth-tax Act‖ (w.e.f. 1-4-1993).
- 4Ins. by s. 42, ibid, (w.e.f. 1-4-1993).