Law of Taxation - Unit 2 (Prepared by Jijo)

1. Taxes on Income

Income tax is one of the most significant forms of revenues for the government. Income tax is
levied on individuals on the income they earn. In India, the income tax is levied based on brackets
system. Income tax is imposed by the government authorities under their jurisdictions. Most
countries mandate their citizens to file their income tax returns on an annual basis.
The revenues generated by the form of income taxes will be utilised by the government to offer
better amenities for the public, such as roads and housing. All individuals earning above a certain
threshold should mandatorily file their income tax returns in order to stay tax compliant.
Investmenting in certain options/funds, specified by the government, entitles taxpayers for tax
deductions. In India, taxpayers can avail tax deductions of up to Rs 1,50,000 per year by
investing in options covered under Section 80C of the Income Tax Act, 1961.

When is Income Tax Applicable?

● The income tax means amount deducted from any source of income, but there are certain
exceptions because it is reduced from one month’s salary.
● It is also deducted on the amount saved through retirement or savings plan for those who
are getting monthly, quarterly or annual annuities.
● Apart from these two sources of income, the Income Tax department breaches the income
one receives additional three resources.
● As per the rules of ITA, any income earned from renting owns property to a tenant will
also be taxable. Apart from this, returns from mutual funds, real estate and other
market-linked asset classes are also taxable.
● The interest earned by a policyholder on specific instruments like recurring deposits or
fixed deposits is also eligible for an income tax deduction.
● However, income tax is also deductible if a person works as a business owner, employee
or freelancer.

What are the 5 types of income tax?

● Income from salary
● Income from house property
● Income from profits and gains from business or profession
● Income from capital gains
● Income from other sources

2. Residential Status
An individual’s taxability in India is determined by his residential status under the income tax act
in India for any given fiscal year. The phrase “residential status” was coined by India’s income
tax rules and should not be confused with an individual’s citizenship in India.
An individual may be an Indian citizen but become a non-resident for a certain year. Similarly, a
foreign citizen may become a resident of India for income tax purposes in a given year.
It is also worth noting that the residential status as per income tax differs to sorts of people, such
as an individual, a corporation, a company, and so on, decided differently.
Resident Status Classifications
Income Tax Law has divided the residence status of an individual in India into three categories
based on the length of time he or she has lived in India. An individual’s residential status will
include his or her current fiscal year as well as previous years of stay.
The following categories are used to classify an individual’s residence status.
a. Resident and Ordinarily Resident (ROR)
Individuals are deemed to be residents of India under Section 6(1) of the Income Tax Act if they
meet the following conditions: If he/she stays in India for 182 days or more in a fiscal year, or if
he/she stays in India for 60 days or more in a fiscal year, and if he/she stays in India for 365 days
or more in the four years immediately before the previous year and comes under ordinary resident
in income tax.
According to section 6(6) of the Income Tax Act of 1961, there are two criteria under which an
individual will be considered a “Resident and Ordinarily Resident” (ROR) in India.
● If he or she spends 730 days or more in India in the seven years preceding the current year.
● If he/she has resided in India for at least two of the ten prior fiscal years before the current
year.

b. Resident but Not Ordinarily Resident (RNOR)

When an assessee meets the following fundamental requirements, he or she will be regarded as
RNOR: If an individual stays in India for a time of 182 days or more in a fiscal year; or if he/she
stays in India for a period of 60 days in a fiscal year and 365 days or more in the four preceding
fiscal years.
An Assessee, on the other hand, will be classified as a Resident but Not Ordinarily Resident
(RNOR) if they meet one of the following fundamental conditions:
● If he/she stays in India for 730 days or more in the previous fiscal year.
● If he/she was a resident of India for at least 2 out of 10 days in the previous fiscal year.

c. Non Resident (NR)

An individual will be eligible for Non-Resident (NR) status if he or she meets the following
criteria:
● If an individual spends less than 181 days in India within a fiscal year.
● If an individual stays in India for no more than 60 days in a fiscal year.
● If an individual stays in India for more than 60 days in a fiscal year but does not remain for
365 days or more in the preceding four fiscal years.

Tax for Residents, NR, NROR

● For a Resident: A resident will be taxed in India on his total income, which includes
money generated in India as well as income obtained outside of India.
● For NR and RNOR: Their tax burden in India is limited to the income they make in the
country. They are not required to pay any tax in India on their international earnings. Also,
in the event of double taxation of income, when the same income is taxed in India and
overseas, one may rely on the Double Taxation Avoidance Agreement (DTAA) that India
would have signed with the other nation to avoid paying taxes twice.

Some Important Points To Be Noted:

1. Residential Status for each previous year: The Residential Status is determined for each
previous year separately, because the Residential Status may change from year to year.
2. Different Residential Status for different Previous years in the same Assessment Year is not
possible.
3. Different Residential Status for different Assessment Years.
4. A person may be Resident of more than one country for any previous year.
5. Continuity not required : it is not required that the stay should be for a continuous period or
at any one place in India.
 6. Citizenship ≠ Residential status: Citizenship of a country and Residential Status of that
country are separate concepts. A person is also an Indian national/ citizen, but might not be a
Resident in India and vice- versa. Because an Individual shall be considered resident in India
as per IT Act, if he satisfies the specific conditions U/s 6(1) & 6(6), but the Citizenship
emerge after birth.
7. A stay by an Individual on a Yatch moored in the Territorial water of India would be
treated as presence in India.
8. Indian origin: A person is said to be Indian Origin if he/ She or either of his/her parents or
any of the grand parents are born in Undivided India.
9. Resident for one source = Resident for all sources

How to Calculate the Residential Status of an Individual?

● First, it is noted if the individual falls under the category of exceptions for primary
conditions.
● After which, it is noted if they satisfy the basic condition of 182 days or more. If they do
come under the classification, they would be treated as a resident or a non-resident.

4. Scope of total income

Section 5 provides the scope of total income in terms of the residential status of the assessee
because the incidence of tax on any person depends upon his residential status. The scope of total
income of an assessee depends upon the following three important considerations:

● (i) the residential status of the assessee;

● (ii) the place of accrual or receipt of income, whether actual or deemed; and (
● iii) the point of time at which the income had accrued to or was received by or on behalf of
the assessee.

Section 5 of the Income-tax Act, 1961 states the provisions relating to income that is taxable in
the hands of the person during the PY,

S. No. Particulars Resident and Resident but Non-Resident

Ordinarily not-Ordinarily (NR)
Resident (ROR) Resident
(RNOR)
1 Income received or is deemed to Taxable Taxable Taxable
be received in India
2 Income accrues or arises or is Taxable Taxable Taxable
deemed to accrue or arise in India
3 Income accrues or arises outside Taxable Taxable Not Taxable
India but business & profession
controlled or set up in India
4 Income accrues or arises outside Taxable Not Taxable Not Taxable
India and business & profession
controlled or set up outside India
5 The past foreign (un-taxed) Not Taxable Not Taxable Not Taxable
income brought into India

5. Exempted income

Exempt Incomes are the incomes that are not chargeable to tax as per Income Tax law i.e. they
are not included in the total income for the purpose of tax calculation while taxable Incomes are
chargeable to tax under the Income Tax law.

Exempt income refers to income that is not taxed at all and it is different from income tax
deduction. The word deduct means to subtract from the total. Under income tax provisions,
deduction is an amount reduced from the total income of the taxpayer. These deductions are
offered to taxpayers when they invest in certain tax-saving instruments. In short, they get a tax
deduction on the way they spend their income.

For example, income tax deduction of up to Rs 1.5 lakh can be availed when spent on insurance
premium, PPF, ELSS and so on, under Section 80C.
Here is a list of exempt income as specified under Section 10 of the Income Tax Act:
1. Agricultural income
2. Amount received out of family income
3. Interest paid to a non-resident
4. Leave travel concession
5. Amount received as leave encashment on retirement
6. Gratuity
7. House rent allowance
8. Scholarship income
9. Amount received under a life insurance policy

6. Basis of charge (Section 4)

Tax cannot be levied or collected in India except under the authority of Law. Section 4 of the
Income- tax Act, 1961 gives authority to the Central Government for charging income tax. This is
the charging section in the Income-tax Act, 1961 which provides that:
(i) Tax shall be charged at the rates prescribed for the year by the Annual Finance Act;
(ii) The charge is on every person specified under section 2(31);
(iii) Tax is chargeable on the total income earned during the previous year and not the
assessment year. (There are certain exceptions provided by sections 172, 174, 174A, 175
and 176);
(iv) Tax shall be levied in accordance with and subject to the various provisions contained in
the Act.
This section is the backbone of the law of income-tax insofar as it serves as the most operative
provision of the Act. The tax liability of a person springs from this section.

7. Heads of Income: (Section 14)

Gross Total Income means aggregate of income computed under the above five heads, after
making clubbing provisions and adjustments of set off and carry forward of losses.
For the purpose of computation of total income under the Income-tax Act, 1961, all the incomes
shall be classified under the following 5 heads of income:
(i) Salaries [Secs. 15 to 17]
The first head of income is income from salary. If there exists a relationship between payer and
payee in a firm or agreement, and the relationship is between employer and employee where the
employee is being paid a certain amount of remuneration for their services, then the income can
be charged under this head of income. A salary could be any sort of monetary compensation. This
could be any basic and normal wage, annuity, pension, gratuity, leave encashment, etc.
(ii) Income from House Property [Secs. 22 to 27]
This part sheds light and detail about the taxation policy on the house or real estate that you, as a
taxpayer, are residing in. Vacant house property is considered as 'self-occupied' in regards to the
purpose of income tax. In the situation that a taxpayer owns more than a single self-occupied
house, then only one house is treated and considered as a single self-occupancy house property.
Rest is considered to be let out.
(iii) Profits and Gains of Business or Profession [Secs. 28 to 44DB]
This is the third head of income under the Income Tax Act. A business includes any kind of trade,
commerce, manufacturing, or any nature of trade. Profession implies the acquisition of specific or
special knowledge in a particular field after a period of education and verified examination.
Under this head of income, profits and gains made during the tenure of business are subjected to
complete and total taxation. Profits incurred on the sale of imports, incentives, any interest or
form of salary or bonus, and a commission from a firm are all taxable under this head of income
in the Income Tax Act.
(iv) Capital Gains [Secs. 45 to 55A]
Being the fourth head of income under the Income Tax Act, income gained from any capital asset,
be it movable or immovable, is deemed taxable. Capital gains are divided into two parts:
long-term capital gains and short-term capital gains. These gains are taxed under the head of
income – income from capital gains.
(v) Income from Other Sources [Secs. 56 to 59]
Any income derived from sources other than the previously mentioned four heads is considered
to be under this category of income. Some examples of income from other sources include
interest gained from bank deposits, winning in the lottery, or even any sum of money which is
more than Rs. 50,000 received from another individual who does not form a part of the taxpayer
relative, spouse or if the money is acquired via inheritance or will. All these sources, even if it is
gambling or even card games, are chargeable for tax under Section 56(2) of the Act.

8. Salaries - Section 17 (1)

Salary is a much broader term than what we understood. Salary is used when there is an
employer-employee relationship between the payee and the payer. While calculating the income
under the head salaries, the total amount of salary, perquisites, and profits provided in place of a
salary received in a financial year must be calculated.

Incomes Classified as “Salary” Under Section 17(1) are:-

● Wages- Wages refer to the payment or remuneration given to an employee in exchange for
their work or services rendered. It is typically paid hourly for blue-collar jobs, such as
factory workers, mechanics, or construction workers. It is fully taxable under Section 15 if
received during the relevant previous year.
● Annuity or pension- An annuity or pension is amount received by an individual that
provides a fixed stream of payments over a certain period, typically after retirement. It is
designed to provide a steady income to help individuals meet their financial needs in
retirement. Annuity received from a present employer is taxed as ‘Salary while the
Annuity received from a previous employer is taxed as ‘Profits in lieu of Salary’.
● Advance of salary- An advance of salary is a payment made by an employer to an
employee before the employee's regular salary payment date. This payment is usually
made in anticipation of an employee's financial need or emergency.It is fully taxable under
Section 15.
● Gratuity- Gratuity is a lump-sum payment made by an employer to an employee as a
token of appreciation for the employee's long and meritorious service. It is a type of
retirement benefit and is usually paid when an employee completes a certain period of
service with the employer, such as 5 or 10 years. Taxed as per Section 10(10) and is
exempted up to certain limits.
● Fees, commissions, perquisites- Fees, commissions, and perquisites are types of income
that an individual may receive as part of their employment or business activities.
○ An amount received as fees to the employee from the employer for the services
rendered is included in the definition of salary.
○ Any amount of commissions given to the employee for the services provided shall
form part of the salary. If the employee receives a fixed commission as a percentage
of the sales or profits, it shall be considered a salary.
 ○ Perquisites, also known as perks, are benefits or privileges provided to an employee
in addition to their regular salary or wages. This is explained more under Section 17
(2).
● Profits in lieu of salary- Profits in lieu of salary refer to any payment or benefit received
by an employee in connection with their employment, other than salary or wages. This can
include bonuses, commissions, incentives, allowances, or any other form of compensation
not classified as salary. This is explained more under Section 17(3).
● Leave encashment- Leave encashment is a payment made to an employee in lieu of the
employee taking their entitled leave. In other words, it is the amount paid to an employee
for the unutilized leave days they are entitled to.
● EPF- EPF stands for Employees' Provident Fund, a retirement savings scheme for salaried
employees in India. The scheme is managed and regulated by the Employees' Provident
Fund Organization (EPFO), a statutory body under the Ministry of Labour and
Employment.
● NPS- A contribution made by the Central Government or any other employer in a financial
year in an employee’s account under National Pension Scheme (NPS) will form part of the
salary.
● Transferred PF balance- The taxable portion of the transferred balance from an
unrecognized provident fund to a recognized provident fund will be considered salary.

What is the basis of salary income being charged?

The salary income is charged on the basis of Section 15 of the Income Tax Act. It is charged on a
‘receipt basis’ or ‘due basis,’ whichever is earlier. A salary received in a particular financial year
comprises of:-
● Any advance amount paid to the employee before it became due or payable.
● Any salary due to the employee during the year.
● Arrears of salary paid to the employee during the year and not charged to tax in any earlier
years

What are the conditions under which the salary is taxable in India?
● If the services are rendered in India, it is taxable, no matter whether the payment is made
outside the country.
● Salary paid by the Government of the foreign country to their employees serving in India.
● Leave salary paid to the employees working outside India and earned the leaves in India.

9. Income From House Property (Section 22-27 of Income Tax Act, 1961)

The Income Tax Act has divided the income received by an individual into various heads for
simplification of tax computation. One of these heads is “Income from House property.” The
income earned by the ownership of a property is said to be Income from House property. If a
taxpayer owns a house property and rents (let it out) it, this income is termed as Income from
House Property.The rent procured from that property is taxable. Property refers to any building
(house, office building, warehouse, factory, hall, shop, auditorium, etc.) and/or any land attached
to the building (compound, garage, garden, car parking space, playground, gymkhana, etc.).

If the property is used for residential purposes, it is taxed under income from house property. On
the other hand, if the property is used for business or profession, it is considered income from
business or profession.
After budget 2023 announcement, the government has changed how capital gains on the sale of a
residential property are calculated. The cost of acquiring a house property doesn’t include any
home loan interest claimed as an income-tax deduction by the seller throughout its holding term.
If it is proposed not to include the interest claimed earlier as a deduction as the cost of acquisition
for computing capital gains. This may have an impact on taxpayers who are planning to sell their
residential property in the future.

Income from House Property is a significant component of taxation under the Income Tax Act,
1961. Here's a breakdown of the taxable elements under this head:

● Self-Occupied Property: This refers to a house property that is used for one's own
residential purposes. If an individual owns only one self-occupied property, it is treated as
a self-occupied property for tax purposes. In such cases, the notional rental income is not
taxable, and individuals can claim deductions on the home loan interest paid, subject to
certain limits.
● Let-Out Property: A let-out property is one that is rented out or leased to another party.
The rental income received from such a property is taxable under the head "Income from
House Property." Individuals can claim deductions on the municipal taxes paid, standard
deduction (30% of the net annual value), and interest on home loans.
● Inherited Property: An inherited property i.e. one bequeathed from parents,
grandparents, etc. again, can either be a self-occupied one or a let-out one based on its
usage as discussed above.
● Deemed to be Let-Out Property: This category applies to properties that are not actually
rented out but are deemed to be let-out by the tax authorities. It typically includes
properties that are not occupied by the owner due to employment, business, or other
reasons. In this case, the notional rental income is considered taxable, and deductions for
municipal taxes and interest on home loans can be claimed.
● Under Construction Property: Properties that are under construction or not ready for
occupation are also considered for taxation purposes. In such cases, individuals cannot
claim rental income as the property is not let-out. However, once the construction is
complete, the applicable treatment (self-occupied or let-out) will be determined based on
the actual usage or rental arrangement.

What are the conditions for taxability of Income from House Property?
The income from house property is added to your gross total income only when it fulfills three
basic conditions -
● You are the owner of that property.
● Property consists of any buildings and/or land. The building can be a residential house,
factory building, shop, office, etc.
● The property is used for any purpose except by you(owner) to run your business or
profession.
Important Note: The rent from the vacant land is considered income from other sources.

How to calculate Income From House Property

a. Determine Gross Annual Value (GAV) of the property: The gross annual value of a
self-occupied house is zero. For a let out property, it is the rent collected for a house on
rent.
b. Reduce Property Tax: Property tax, when paid, is allowed as a deduction from GAV of
property.
 c. Determine Net Annual Value(NAV) : Net Annual Value = Gross Annual Value –
Property Tax
d. Reduce 30% of NAV towards standard deduction: 30% on NAV is allowed as a
deduction from the NAV under Section 24 of the Income Tax Act. No other expenses such
as painting and repairs can be claimed as tax relief beyond the 30% cap under this section.
e. Reduce home loan interest: Deduction under Section 24 is also available for interest paid
during the year on housing loan availed.
f. Determine Income from house property: The resulting value is your income from house
property. This is taxed at the slab rate applicable to you.
g. Loss from house property: When you own a self occupied house, since its GAV is Nil,
claiming the deduction on home loan interest will result in a loss from house property. This
loss can be adjusted against income from other heads.
Note: When a property is let out, its gross annual value is the rental value of the property. The
rental value must be higher than or equal to the reasonable rent of the property determined by the
municipality.

10. Profits And Gains Of Business Or Profession (Section 28 of the Income Tax Act of 1961)

“Profit and gains of business or profession” is one of the heads of income under the Income Tax
Act. For the purpose of ascertaining the tax liability of a taxpayer, the Income Tax Act divides the
taxable income of an assessee into five categories or heads of income. Business profits is the third
head of income under the Act, after salaries and house property income. This head is used to
classify or aggregate income which the taxpayer generates through business or professional
activities. While filing an income tax return, the taxpayer must declare the amount of profits and
gains of business or profession in case the assessee is having any such income. In this article, we
mention the procedure for calculating Profits and Gains of Business or Profession.

List of Incomes Classified under Profits and Gains of Business or Profession

The following incomes will be chargeable to income tax under the head “Profits and gains of
business or profession”:

1. Protis and gains of any business which was carried on by the assessee at any time during
the financial year
2. Any compensation or other payment due to or received by:
a. Any person in connection with termination/modification of an agreement for
managing the whole or substantially the whole of affairs of an Indian company or
any other company.
b. Any person holding an agency in India for any part of the activities relating to the
business of any other person at or in connection with the termination or
modification of the terms of the agency.
c. Any person for or in connection with the vesting in the Government, or in any
corporation owned by or controlled by the Government, under any law for the time
being imposed, of the management of any property or business.
3. Income derived by trade, professional or similar association from specific services
performed for its members. This is an exception to the general principle that a surplus
arising to a mutual association cannot be regarded as income chargeable to tax.
4. Export incentives which include:
a. Profits on sales of import licenses granted under Imports (Control) Order on
account of exports.
 b. Cash assistance, by whatever name called, received or receivable against export.
c. Duty drawbacks of Customs and Central Excise duties.
d. Any profit on the transfer of the Duty Entitlement Pass Book Scheme.
e. Any profit on the transfer of the Duty Free Replenishment Certificate.
5. Value of any benefit or perquisite, whether convertible into money or not, arising during
the course of the carrying on of any business or profession.
6. Any interest, salary, bonus, commission or remuneration due to or received by a Partner of
a Firm from the firm in which he is a partner.
7. Any sum received or receivable in cash or in kind under an agreement for:
a. Not carrying out activity in relation to any business or profession.
b. Not sharing any know-how, patent, copyright, trademark, license, franchise or any
other business or commercial right of similar nature or information or technique
likely to assist in the manufacture or processing of goods or services.
8. Any sum received under a Keyman Insurance Policy including the sum allocated by way
of bonus on such policy.
9. Any sum whether received or receivable, in cash or kind, on account of any capital asset
being demolished, destroyed, discarded or transferred, if the whole of the expenditure on
such capital asset has been allowed as a deduction under Section 35AD.

Classifying Income Under Profits and Gains of Business or Profession

In case the taxpayer is not able to find a type of income under the list above, the following
conditions can be used to verify if an income would fall under Profits and gains of business or
profession. According to Section 28, the following are the main clause that requires an income to
be charged under profits and gains of business or profession:
1. There should be a business or profession.
2. The business or profession should have been carried on by the assessee.
3. The business or profession should be carried on for some time during the financial year.
4. The charge is in respect of the profits and gains of the financial year of the business or
profession.
5. The charge extends to any business or profession carried on by the assessee whether under
the taxpayer’s own name or otherwise.
Under Section 28, one of the main aspects on determining if an income must be classified under
profits and gains of business or profession is that if a business was carried on by the assessee at
any time during the financial year. It is, however, not necessary that the business tax filing is
carried out throughout the financial year or till the end of the financial year.

Other Income Classified as Profits and Gains of Business

There are certain exceptions to the above rules. The following incomes must be classified under
Profits and Gains of Business, even if a business was not carried on by the assessee during the
previous year.
1. Recovery against any loss, expenditure or trading liability earlier allowed as a deduction.
2. Balancing charge in case of electricity companies.
3. Sale of a capital asset which was used for scientific research.
4. Recovery against bad debts.
5. Any amount which is withdrawn from a Special Reserve.
6. Receipt of discontinued business in the case of assessees who are making use of a cash
system of accounting.
11. Capital Gains Income From Other Sources (Section 56 of the Income Tax Act of 1961)

According to section 56 of the I-T Act, any income, profits, or gains included in the total income
of an assessee but doesn’t fall under any other head of income is chargeable under the head
“Income from Other Sources”. Thus, this head of the income is a residuary head that brings
within its scope all the taxable income, profits, or gains of an assessee that fall outside the scope
of any other head.

The following requirements should be met as per Section 56 of the Income Tax Act for an income
to fall under the head “Income from Other Sources“:
● You earn taxable income during a financial year.
● The taxable income cannot be categorised under any other head of income, such as
Salaries, Income from House Property, Profits and gains of business or profession, and
Capital gains.

Incomes Chargeable under the head ‘Income from Other Sources.’

a. Dividend Income
Dividend income includes the dividend received from any company, deemed dividend under
section 2(22) (a)/(b)/(c)/(d)/(e), and interim dividend.
b. Casual Income
Casual income includes winnings from lotteries, crossword puzzles, races including horse races,
card games and other games of any sort, gambling, betting, etc.
c. Interest in compensation or enhanced compensation
Any income earned by the assessee as interest received on compensation or enhanced
compensation shall be taxable in the year it is received under the head “Income from other
sources”.
d. Advance forfeited for transfer of a capital asset.
Any sum of money received as an advance or otherwise in the course of negotiation for the
transfer of a capital asset is chargeable to tax under the head “income from other sources” if the
transfer of such capital asset doesn’t take place and such amount is forfeited.
e. Compensation on termination of employment
Any compensation or payment received by the assessee in connection with the termination of
employment or the modification of the terms and conditions relating to their employment shall be
chargeable to tax under this head.
f. Keyman Insurance Policy
Any sum received under a keyman insurance policy, including any bonus allocated on such
policy, is chargeable under “Income from other sources” if such income is not chargeable under
the head of salaries or profit or gains from business or profession.
g. Interest Income From Saving Bank and Fixed Deposit
Any interest received on fixed deposits, post office or accumulated in a savings bank account
must be declared income from other sources.
h. Family Pension
If an assessee is receiving the pension on behalf of a deceased person, they should declare such
income under the heading ‘Income from Other Sources’.
i. Gifts
● Money: If an assessee receives any money as a gift without consideration, and the
aggregate value exceeds INR 50,000, the total consideration received is taxable.
● Immovable Property: If an assessee receives any immovable property as a gift
without consideration, the stamp duty value of such immovable property will be
taxable as income in the hands of the recipient if it exceeds INR 50,000. If an
 assessee receives any immovable property as a gift for a consideration that is less
than the stamp duty value of the property and the difference between the stamp duty
value and considerations is more than the higher of INR 50,000 and 10% of
consideration, the difference between the stamp duty value and the consideration
paid is taxable in the hands of the recipient.
● Movable Property : If an assessee receives any movable property without
consideration, the aggregate fair market value of such property on the date of
receipt would be taxable in the hand of the recipient if the amount exceeds INR
50,000. If an assessee receives any movable property for inadequate consideration
and the difference between the aggregate fair market value of such property and
consideration exceeds INR 50,000, such difference would be taxable.