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Gift Tax Interview Questions & Answers - Learning Mode

Gift Tax Interview Questions & Answers - Learning Mode

If you receive gift from someone it is clubbed with your income and you need to pay tax on it. This tax is called as gift tax. This tax is applicable if gift amount or value is more than 50000 Rs/- in a year. The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The gift tax applies to the transfer by gift of any property.

Try Gift Tax Interview Questions & Answers - Exam Mode

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Gift Tax Interview Questions & Answers - Learning Mode
Try Gift Tax Interview Questions & Answers - Exam Mode
Question: Can I make a gift to a Company or a Society?

Answer: The receiver of a gift may also be a juristic person such as companies, registered societies etc. However, he must an ascertainable person. Source:
Question: Is there an income tax liability on a Gift of Immovable Property that I have received?

Answer: A person receiving a gift of property is liable to pay gift tax. This income would be taxable in the year the gift is received under the tax head of income from other sources. Source:
Question: What if my spouse and I want to give away property that we own together?

Answer: You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013 (including 2014, 2015, and 2016). Source:
Question: Can i gift a property which is burdened with Liabilities?

Answer: Onerous gift is a gift which is burdened with Liabilities. When the liabilities of a property exceed its market value, gift of such a property is an onerous gift. Since acceptance is an essential for completing the transaction of a gift, a transferee may refuse to accept such a gift. When a gift is in the form of a single transfer to the same person of several things of which one is, and others are not, burdened by an obligation, the donee can take nothing by the gift unless he accepts it fully. Source:
Question: To whom can I gift my Immovable Property?

Answer: The person to whom a gift is transferred is referred to as the "donee". He need not be competent to contract. He may be any person in existence at the date of making the gift. A gift made to a person who is less than 18 years in age (a minor), or is incapable to contract by reason of insanity or minority is also capable of being a donee, if it is lawfully accepted by a competent person on his behalf. For instance, a person A, being an 8 year old can be a donee, if his father accepts such gift on Source:
Question: What other information do I need to include with the Gift Tax Return?

Answer: You need Form 709 (PDF), 709 Instructions and Publication 559.

Among other items listed:-
Copies of appraisals.
Copies of relevant documents regarding the transfer.
Documentation of any unusual items shown on the return (partially-gifted assets, other items relevant to the transfer(s)). Source:
Question: Are there Exemptions to the Income Tax Liability of Gifts Received?

Answer: Gifts Received from Relatives, or on the occasion of marriage, or under will or by way of inheritance, or in contemplation of death, or those received from a local authority are exempt from tax. Source:
Question: How do I make a Gift of immovable property?

Answer: You would be required to execute a Gift Deed in the same manner a sale of property involves a sale deed. The Gift Deed will need to be stamped and registered. A gift of immovable property can only be made after due registration after payment of adequate stamp duty. Source:
Question: What qualifies as a Gift under tax laws?

Answer: The original Gift Tax Act had classified certain categories of items that fell under its purview.

The new tax rules for gifts continues to utilize this for identifying taxable and non-taxable monetary receipts and transferred assets.

Definition of gifts:-

Cash or cheque receipts.

Immovable property including land, building, house or flat.

Movable property including vehicles, securities, archaeological collection, bullion, jewellery, antiques, works of art, pain Source:
Question: What is considered a Gift?

Answer: Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return, is considered as gift.

A gift is transfer of the ownership of property free of charge usually done out of love and affection or goodwill. Therefore, a gift of property made to a person is without and payment in return. The transferor is called the donor and the transferee is called the donee. Source:
Question: What is the tax liability of gifts received from friends?

Answer: It is only the gifts received from relatives that are exempt from tax liability. Unless the gift comes under any under exemption, it would not be exempted from tax by the virtue of being given by a friend. Source:
Question: ​If the aggregate value of gift received during the year by an individual or HUF exceeds Rs. 50,000, whether total amount of gift will be charged to tax or only the amount in excess of Rs. 50,000 will be charged to tax?

Answer: Sum of money received without consideration by an individual or HUF is charged to tax if the aggregate value of such sum received during the year exceeds Rs. 50,000. Once the aggregate value of monetary gift received during the year exceeds Rs. 50,000, then the aggregate value of gift received during the year will be charged to tax.​ Source:
Question: How to benefit legally from Gift Tax Exemptions?

Answer: 1. Income earned on invested gifts is not clubbed with donor?s income, if the investment in tax-free. Invest in PPF, EPF, listed shares or tax-free bonds as a gift in in your spouse?s name. Any interest earned on PPF or long-term capital gains earned on sale of bonds or equity shares will be tax-free.

2. Gift an investment or loan interest-free money to parents or siblings, especially when their total income is below the relevant threshold levels. Any income earned from the gift such as h Source:
Question: May I deduct Gifts on my Income Tax Return?

Answer: Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). Source:
Question: ​Are there any cases in which prescribed movable property received for less than its fair market value by an individual or HUF is not charged to tax?

Answer: Normally, prescribed movable property received (i.e. acquired) by an individual or HUF for less than its fair market value is chargeable to tax. However, in the following cases nothing will be charged to tax in respect of prescribed movable property received for less​ than its fair market value:

Property received from relatives (*).
Property received by a HUF from its members.
Property received on the occasion of the marriage of the individual.
Property rece Source:
Question: ​An Individual received gift of a flat from his friend. The stamp duty value of the flat is Rs. 84,000. In this case whether the total value of gifted property will be charged to tax or only the value in excess of Rs. 50,000 will be charged to tax?

Answer: The entire value of immovable property received without consideration, i.e., received as gift will be charged to tax. Once the taxability is attracted, i.e., value of property received as gift exceeds Rs. 50,000 then the entire value of the property is chargeable to tax. Hence, in this case entire value of property, i.e., Rs. 84,000 will be charged to tax.​ Source:
Question: Classification of Gift and Gift Tax rates?

Answer: The following items received by individuals and HUF may or may not be subject to gift tax, depending on the basic value clause and exemption categories:-

Gift receipts of Rs 50000 or lower each year

Any assets or money received as a gift is valued at Rs 50000 or below in a year, it is considered as tax-free gift. If you receive two or three gifts (other the exempted gifts), the total amount has to be fifty thousand or lower.

Gift receipts of more than Rs 50000 each year< Source:
Question: How is the stamp duty calculated on a Gift?

Answer: The stamp duty has to be paid on the market value of the property. Source:
Question: Is there income tax liability on a Hindu Undivided Family (HUF) on a Gift made to the HUF by a member of the HUF?

Answer: A Gift made to a HUF by a member of the HUF is exempted from the income tax liability of the HUF. Source:
Question: Are gifts received by all the relatives exempt from tax?

Answer: The term "relatives" is used in a limited sense for exemption from tax liability. The only relatives the gifts from whom are exempt from tax liability are as follows in case of an individual:-

a) Spouse of the individual (husband or wife)
b) Brother or sister of the individual
c) Brother or sister of the spouse of the individual (brother in law or sister in law)
d) Brother or sister of either of the parents of the individual (aunts and uncles)
e) Any lineal ascendant or descen Source:

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