Taxation

~~with focus on tax education~~

Tax Treatment of Gift
Thursday, January 1, 2009

Bookmark and Share

As per Income Tax Ordinance, 2001 there is no tax implication over gift received from any one, however gain on sale of such asset that was received as gift would be treated under section 37 of ITO, 2001 that is as follows;

37. Capital gains

(1) Subject to this Ordinance, a gain arising on the disposal of a capital asset by a person in a tax year, other than a gain that is exempt from tax under this Ordinance, shall be chargeable to tax in that year under the head “Capital Gains”.

(2) Subject to sub-sections (3) and (4), the gain arising on the disposal of a capital asset by a person shall be computed in accordance with the following formula, namely:–
A – B
where
A is the consideration received by the person on disposal of the asset; and
B is the cost of the asset.

(3) Where a capital asset has been held by a person for more than one year, the amount of any gain arising on disposal of the asset shall be computed in accordance with the following formula, namely:–
A x  ¾
where A is the amount of the gain determined under sub-section (2).

(4) For the purposes of determining component B of the formula in subsection (2), no amount shall be included in the cost of a capital asset for any expenditure incurred by a person –
(a) that is or may be deducted under another provision of this Chapter; or
(b) that is referred to in section 21.

(4A) Where the capital asset becomes the property of the person-
(a) under a gift, bequest or will;
(b) by succession , inheritance or devolution;
(c) distribution of assets on dissolution of an association of persons; or
on distribution of assets on liquidation of a company, the fair market value of the asset, on the date of its transfer or acquisition by the person shall be treated to be the cost of the asset.

(5) In this section, “capital asset” means property of any kind held by a person, whether or not connected with a business, but does not include –
(a) any stock-in-trade (not being stocks and shares), consumable stores or raw materials held for the purpose of business;
(b) any property with respect to which the person is entitled to a depreciation deduction under section 22 or amortisation deduction under section 24;
(c) any immovable property; or
(d) any movable property (excluding capital assets specified in sub-section (5) of section 38) (Substituted for "(including wearing apparel, jewellery, or furniture)" by Finance Act, 2003) held for personal use by the person or any member of the person’s family dependent on the person.

Labels:

posted @ 4:49 PM,

8 Comments:

At February 18, 2009 at 3:59 PM, Anonymous PreetDunia said...

What about Sub Section 2 ofd Section 79?

 
At July 26, 2009 at 2:52 PM, Anonymous Anonymous said...

Before proceeding further it is imperative to mention that gifts are made out of natural love and affection and in this respect Contract Act, 1872 citations may please be kept in mind.

 
At September 26, 2018 at 8:54 AM, Blogger Jon Sigurdsson said...

Thanks for the excellent explanation!
Small Business Tax

 
At February 7, 2019 at 11:58 AM, Blogger Jone Smith said...

This article is very good and the users are really sharing nice thoughts. Thanks a lot for giving everyone an exceptionally splendid possibility to read in detail from this blog which you have described about a tax treatment of gift. For attending his friend wedding people are present a gift and for this purpose he need a best travel services. So, think from LHE to LHR service for your traveling.

 
At February 26, 2019 at 9:24 AM, Blogger Jone Smith said...

You have delivered a great knowledge about a tax treatment of gift. People who is received a gift from his friend they cannot give a tax.For this purpose they find a best travel services so, i would suggest for best traveling you can Click Here at http://rentacarlahore.net & Car Hire in Lahore and book a ticket at an affordable fare rates.

 
At February 26, 2019 at 9:27 AM, Blogger Jone Smith said...

You are really doing a great job in this field If anyone are wants to buy server hosting then you can be easily Visit Here http://gizmoservers.com & Get Minecraft Server Hosting at an affordable fare rates.

 
At November 13, 2019 at 9:00 PM, Blogger electronicsoninstallment said...

Wonderful post! Keep up the good writing. Thanks for sharing with us! This is amazing. And, if someone want to know about Electronics on installment lahore then its good for you.

 
At November 21, 2019 at 11:58 PM, Blogger Jone Smith said...

It is an organization that is known for keeping the solace and comfort of its customers above everything else. Click Here What causes miscarriage

 

Post a Comment

<< Home


Light Within

Enter your email address:


Blog Roll

ss_blog_claim=eebcdd26d5c32d5838ede03f68f01f91 ss_blog_claim=eebcdd26d5c32d5838ede03f68f01f91