THE GIFT TAX ACT 1958

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Several types of taxes are obtained from the citizens for the economic stability and development of a Nation. In India taxes including income tax, wealth tax, vehicle tax, entertainment tax etc contributes a lion’s share in the economic strategy of the country. Transfer of property act deals with the transactions relating to the immovable property. In the act transfer of property in terms of gift is defined. Any property that absolutely belongs to a person can be transferred at his will to anyone.

The Gift Tax Act was enacted in the year 1958 with the object to impose tax on certain transferred property as gift. The person who gives the property and its rights is termed as Donor and the recipient is defined as Donee. The gift should be made voluntarily without monetary consideration. The tax from the taxable gifts can be collected by the Gift Tax officer in the manner prescribed in the act. He has the absolute authority for performing the functions of an income tax officer specified in section 7 of the act. Section 10 empowers the Inspecting Assistant Commissioner of Gift tax to exercise the duties of an Assistant Commissioner of gift tax.

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An exemption provision is also stated in section 5 of the act. Apart from the taxable gifts there are exemptions imposed on certain gifts. The immovable property situates outside the territory of the India where the act is not in force, savings certificate issued by the Central Government, property gifted to government, property gifted for charitable purposes, gifts given to religious worship centers including temple, church, mosque, gift given under will, gift given for the education of children are some of the categories of gifts that are exempted from the tax.

The value of the gift is rated according to the market value of the property in the open market. The assessment of the chargeable gifts tax can be presented before the tax authorities including the Board, Gift tax Officer, Commissioner of gift tax etc. The Assistant Commissioner of gift tax is authorized to make any necessary enquires with all competent power of a gift tax officer. According to section 15 of the act the Gift Tax officer is satisfied by the returns made by the assessee can make assessment of value of the taxable gift. He can refund the excess amount taken from the assessee or direct the assessee to pay any additional amount chargeable on the tax. If the Gift tax officer is not satisfied by the returns of the assessee he can after giving a reasonable opportunity for the assessee to present before him and after considering the evidence of the assessee can make the correct value of tax payable on the property. If the gift officer is convinced that without a reasonable cause the assessee had not paid his chargeable tax a penalty of rupees one thousand shall be imposed. A deduction of stamp duty is exempted from the gift tax if the gift is made on instrument where sufficient stamp duty is paid. An assessee can prefer appeal to the assistant commissioner against an order made by the gift tax officer. An appeal against the commissioner can moved in the Appellate Tribunal. The hierarchy above the appellate tribunal is the High Court and Supreme Court.

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In ancient times any gift given was considered as a token of love and affection of a person to another. A gift was considered as a valuable possession but in modern times where laws has an impact on a person’s everyday life is ensuring legal validity and existence on a gifted property by the application of the Gift Tax law. The possession and title of the gifted property has legal confirmation through the payment of proper gift tax.