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Question: Why was an abolished Gift tax restored?

Answer: The original Gift Tax Act, 1958 laid down tax rules for gifts received by individuals and HUFs.

It was abolished in 1998 as a tax relief measure for middle class tax payers who gave and received gifts.

But when a lot of people, particularly business owners, stated misusing this system to launder money, accumulate black money, and create benami properties in the name of non-relatives, the finance ministry decided to step in to prevent further misuse. In order to that, they incorporated a gift tax system Section 56(2) of Income Tac Act, 1961.



Category Gift Tax Interview Questions & Answers - Exam Mode / Learning Mode
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Question: Why was an abolished Gift tax restored?
Answer:

The original Gift Tax Act, 1958 laid down tax rules for gifts received by individuals and HUFs.

It was abolished in 1998 as a tax relief measure for middle class tax payers who gave and received gifts.

But when a lot of people, particularly business owners, stated misusing this system to launder money, accumulate black money, and create benami properties in the name of non-relatives, the finance ministry decided to step in to prevent further misuse. In order to that, they incorporated a gift tax system Section 56(2) of Income Tac Act, 1961. Source: CoolInterview.com



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