Section 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
(i) of immovable property situate outside the territories to which this Act extends;
(ii) of movable property situate outside the said territories unless the person
(a) being an individual, is a citizen of India and is ordinarily resident in the said territories, or
(b) not being an individual, is resident in the said territories, during the previous year in
which the gift is made;
1
(iia) being an individual who is not resident in India, to any person resident in India, of foreign
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.
Explanation. For the purposes of this clause, the expression resident in India shall have the
meaning assigned to it in the Income-tax Act;
2
(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.
Explanation. 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);
(iic) 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.
Explanation. For the purposes of this clause and clause (iid),
(a) 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;
(b) 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;
(c) relative has the meaning assigned to it in clause (41) of section 2 of the Income-tax
Act;
(d) resident of India shall have the meaning assigned to it in the Income-tax Act;
(iid) 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 3
any foreign exchange asset as defined in
clause (b) of section 115C of the Income-tax Act;
4
(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.
Explanation. 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;
(iii) 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;
5
* * * * *
6
(iiib) of property in the form of Special Bearer Bonds, 1991;
7
(iiic)
8
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 :
Provided that the exemption conferred by this clause shall be available only to a person who has
initially subscribed to the said bonds;
9
(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;
10
(iiie) being an individual who is a non-resident Indian, 11
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.
Explanation. For the purposes of this clause, the expressions
12
* * * * *
(b) non-resident Indian shall have the meaning assigned to it in clause (e) of section 115C
of the Income-tax Act;
(iv) to the Government or any local authority 13
or any authority referred to in clause (20A) of
section 10 of the Income-tax Act ;
(v) to any institution or fund established 14
or deemed to be established for a charitable purpose
to which the provisions of 15
section 80G of the Income-tax Act apply ;
16
(va) (i) to such temple, mosque, gurdwara, church or other place as has been notified by the
Central Government for the purposes of 17
clause (b) of sub-section (2) of section 80G of the
Income-tax Act ; or
(ii) 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 ;
18
* * * * *
(vii) 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 19
one hundred thousand in value in respect
of the marriage of each such relative ;
20
* * * * *
21* * * * *
(x) under a will ;
(xi) in contemplation of death ;
(xii) for the education of his children, to the extent to which the gifts are proved to the
satisfaction of the 22Assessing 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 22Assessing 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;
23* * * * *
(xv) to any person in charge of any such Bhoodan or Sampattidan movement as the Central
Government may, by notification in the Official Gazette, specify.
24
* * * * *
25
(1A) Any reference in clause (v)
26
*** 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.
(2) 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 27
thirty thousand in value.
28
* * * * *
Explanation.—For the purposes of this section,—
(a) 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 29
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 ;
(b) 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 ;
(c) a company shall be deemed to be resident in the territories to which this Act extends during
the previous year, if—
(i) 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
(ii) during that year, the control and management of that company was situated wholly in the
said territories ;
(d) gifts made in contemplation of death‖ has the same meaning as in section 191 of the Indian
Succession Act, 1925 (39 of 1925).
Notes:
1. Ins. by Act 13 of 1966, s. 41 (w.e.f. 1-4-1966).
2. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983).
3. Subs. by Act 12 of 1983, s. 42, for certain words (w.e.f. 1-4-1984).
4. Ins. by Act 38 of 1993, s. 41 (w.e.f. 1-4-1993).
5. Clause (iiia) omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987).
6. Ins. by Act 7 of 1981, s. 7 (w.e.f. 12-1-1981).
7. Ins. by Act 14 of 1982, s. 38 (w.e.f. 1-4-1983).
8. 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).
9. Ins. by Act 26 of 1988, s. 67 (w.e.f. 1-4-1988).
10. Ins. by Act 3 of 1989, s. 80 (w.e.f. 1-4-1989).
11. Subs. by Act 49 of 1991, s. 85, for certain words (w.e.f. 1-4-1991).
12. Clause (a) omitted by Act 49 of 1991, s. 85 (w.e.f. 1-4-1991).
13. Ins. by Act 66 of 1976, s. 28 (w.e.f. 1-4-1977).
14. Ins. by Act 21 of 1973, s. 21 (w.e.f. 1-4-1974).
15. Subs. by Act 32 of 1971, s. 37, for section 88 (w.e.f. 1-4-1968).
16. Ins. by Act 10 of 1965, s. 71 (w.e.f. 1-4-1965).
17. 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).
18. Clause (vi) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
19. Subs. by Act 32 of 1994, s. 55, for thirty thousand (w.e.f. 1-4-1995).
20. Clause (viii) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
21. Clause (ix) omitted, s. 42, ibid, (w.e.f. 1-4-1987).
22. Subs. by Act 4 of 1988, s. 161, for Gift-tax Officer (w.e.f. 1-4-1988).
23. Clause (xiv) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1987).
24. Clause (xvi) omitted by 23 of 1986, s. 42, (w.e.f. 1-4-1987).
25. Ins. by Act 15 of 1965, s. 21 (w.e.f. 1-4-1964).
26. The words, brackets and figures or clause (vi)omitted by Act 23 of 1986, s. 42 (w.e.f. 1-4-1987).
27. Subs. by Act 38 of 1993, s. 41, for twenty thousand (w.e.f. 1-4-1994).
28. Sub-section (3) omitted by 23 of 1986, s. 42 (w.e.f. 1-4-1989).
29. 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).