{"id":6487,"date":"2025-07-14T10:52:54","date_gmt":"2025-07-14T10:52:54","guid":{"rendered":"https:\/\/margbooks.com\/blogs\/?p=6487"},"modified":"2026-01-07T10:20:24","modified_gmt":"2026-01-07T10:20:24","slug":"what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets","status":"publish","type":"post","link":"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/","title":{"rendered":"What Are the Exceptions in Section 56(2)(vii) of Income Tax Act for Gifted Assets?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 ez-toc-wrap-left counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #1c6e70;color:#1c6e70\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #1c6e70;color:#1c6e70\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#A_Quick_Recap_What_is_Section_562vii_of_Income_Tax_Act\" title=\"A Quick Recap: What is Section 56(2)(vii) of Income Tax Act?\">A Quick Recap: What is Section 56(2)(vii) of Income Tax Act?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#Key_Exceptions_to_Section_562vii_When_Gifts_Are_Not_Taxed\" title=\"Key Exceptions to Section 56(2)(vii): When Gifts Are Not Taxed\">Key Exceptions to Section 56(2)(vii): When Gifts Are Not Taxed<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#1_Gifts_from_Relatives\" title=\"1. Gifts from Relatives\">1. Gifts from Relatives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#2_Gifts_Received_on_the_Occasion_of_Marriage\" title=\"2. Gifts Received on the Occasion of Marriage\">2. Gifts Received on the Occasion of Marriage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#3_Gifts_Under_a_Will_or_by_Inheritance\" title=\"3. Gifts Under a Will or by Inheritance\">3. Gifts Under a Will or by Inheritance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#4_Gifts_Received_in_Contemplation_of_Death\" title=\"4. Gifts Received in Contemplation of Death\">4. Gifts Received in Contemplation of Death<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#5_Gifts_from_Local_Authorities_or_Registered_Trusts\" title=\"5. Gifts from Local Authorities or Registered Trusts\">5. Gifts from Local Authorities or Registered Trusts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#6_Gifts_Received_on_Certain_Occasions_or_by_Way_of_Transactions_Not_Regarded_as_Transfer\" title=\"6. Gifts Received on Certain Occasions or by Way of Transactions Not Regarded as Transfer\">6. Gifts Received on Certain Occasions or by Way of Transactions Not Regarded as Transfer<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#Why_Businesses_Need_to_Stay_Updated\" title=\"Why Businesses Need to Stay Updated?\">Why Businesses Need to Stay Updated?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/margbooks.com\/blogs\/what-are-the-exceptions-in-section-562vii-of-income-tax-act-for-gifted-assets\/#Final_Thoughts\" title=\"Final Thoughts\">Final Thoughts<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Not all gifts are created equal, nor are they perceived as such. While receiving a gift might seem like a straightforward and joyful experience, the Income Tax Act of India has a few strings attached, especially when it comes to taxation. One such provision that often raises questions among individuals and professionals is Section 56(2)(vii) of Income Tax Act.<\/p>\n\n\n\n<p>But here\u2019s the good news: not every gift you receive will be taxed. This section also lays down clear exceptions to avoid undue tax liability on certain types of gifts. Let\u2019s explore this topic in detail, especially focusing on what you don\u2019t have to worry about when receiving assets as gifts.<\/p>\n\n\n\n<div class=\"btn-div\">\n\n    <a href=\"https:\/\/me9.in\/MBB\" class=\"marg-btn\" target=\"_blank\" rel=\"noopener\">Get GST Billing Software<\/a>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Quick_Recap_What_is_Section_562vii_of_Income_Tax_Act\"><\/span><strong>A Quick Recap: What is Section 56(2)(vii) of Income Tax Act?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before jumping into the exceptions, let\u2019s understand the section itself.<\/p>\n\n\n\n<p>Section 56(2)(vii) of the Income Tax Act was introduced to curb tax avoidance through gifts. According to this section, if an individual or Hindu Undivided Family (HUF) receives certain movable or immovable property for free or for inadequate consideration, the difference between the fair market value (FMV) and the actual consideration may be taxed as \u2018Income from Other Sources\u2019.<\/p>\n\n\n\n<p>This is applicable when:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The aggregate value of gifts exceeds \u20b950,000 in a financial year.<br><\/li>\n\n\n\n<li>Gifts are received without consideration or for consideration below FMV.<\/li>\n<\/ul>\n\n\n\n<p>But thankfully, there are several exceptions to this rule.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Exceptions_to_Section_562vii_When_Gifts_Are_Not_Taxed\"><\/span><strong>Key Exceptions to Section 56(2)(vii): When Gifts Are Not Taxed<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here\u2019s a closer look at when you can receive a gift without attracting any income tax liability under this section.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Gifts_from_Relatives\"><\/span><strong>1. Gifts from Relatives<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Perhaps the most generous exception, gifts received from relatives are fully exempt, regardless of value.<\/p>\n\n\n\n<p>Under this section, &#8220;relatives&#8221; include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Spouse of the individual<br><\/li>\n\n\n\n<li>Brother or sister (of the individual or their spouse)<br><\/li>\n\n\n\n<li>Brother or sister of either of the parents<br><\/li>\n\n\n\n<li>Lineal ascendant or descendant (e.g., parents, children, grandparents)<br><\/li>\n\n\n\n<li>Spouse of any of the above<\/li>\n<\/ul>\n\n\n\n<p>This ensures that gifts exchanged within the close family circle are not penalised under tax law.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Gifts_Received_on_the_Occasion_of_Marriage\"><\/span><strong>2. Gifts Received on the Occasion of Marriage<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Any gifts received by an individual on their marriage are fully exempt from tax. This applies regardless of whether the gift comes from a relative or a friend. However, this exemption does not apply to other ceremonies like anniversaries or birthdays.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Gifts_Under_a_Will_or_by_Inheritance\"><\/span><strong>3. Gifts Under a Will or by Inheritance<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Assets received through a will or inheritance with <a href=\"https:\/\/margbooks.com\/gst-billing-software.html\"><strong>online GST software<\/strong><\/a> that are also outside the purview of taxation under this section. So, whether it\u2019s land, jewellery, or shares inherited from a parent or grandparent, you won\u2019t have to pay income tax on it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Gifts_Received_in_Contemplation_of_Death\"><\/span><strong>4. Gifts Received in Contemplation of Death<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This is a rarely used but interesting clause. If someone gives away assets while knowing they are close to death (known as <em>donatio mortis causa<\/em>), such gifts are not taxed under Section 56(2)(vii).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Gifts_from_Local_Authorities_or_Registered_Trusts\"><\/span><strong>5. Gifts from Local Authorities or Registered Trusts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Gifts received from:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Local authorities<br><\/li>\n\n\n\n<li>Charitable institutions registered under Section 12AA or 12AB<br><\/li>\n\n\n\n<li>Educational or medical institutions approved by the government<\/li>\n<\/ul>\n\n\n\n<p>&#8230;are <strong>not taxable<\/strong>, provided the entity is compliant with government regulations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Gifts_Received_on_Certain_Occasions_or_by_Way_of_Transactions_Not_Regarded_as_Transfer\"><\/span><strong>6. Gifts Received on Certain Occasions or by Way of Transactions Not Regarded as Transfer<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In some cases, even gifts outside the family may not be taxed if they fall under specific provisions such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Distribution of assets in HUF partition<br><\/li>\n\n\n\n<li>Gifts received during amalgamations or demergers are covered under Section 47 of the Act<\/li>\n<\/ul>\n\n\n\n<div class=\"btn-div\">\n\n    <a href=\"https:\/\/me9.in\/MBB\" class=\"marg-btn\" target=\"_blank\" rel=\"noopener\">Get online Billing Software<\/a>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_Businesses_Need_to_Stay_Updated\"><\/span><strong>Why Businesses Need to Stay Updated?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>While Section 56(2)(vii) primarily affects individuals and HUFs, businesses must also stay on top of these regulations, especially when dealing with gifted inventory, transferred assets, or intra-group transactions.<\/p>\n\n\n\n<p>To maintain compliance and accuracy, modern tools, including <a href=\"https:\/\/margbooks.com\/s\/inventory-management-software\/\"><strong>inventory management software<\/strong><\/a> and online GST software, can help track and document gifted or transferred assets. Not only does this reduce errors, but it also ensures you\u2019re always ready in case of an audit or tax scrutiny.<\/p>\n\n\n\n<p>One such solution tailored for Indian businesses is MargBooks. Whether you\u2019re a startup or a growing enterprise, MargBooks helps manage:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>GST billing and return filing<br><\/li>\n\n\n\n<li>Inventory control and valuation<br><\/li>\n\n\n\n<li>Financial reporting and analytics<\/li>\n<\/ul>\n\n\n\n<p>So, if you&#8217;re dealing with frequent transactions, be it gifts, barter, or intra-group asset shifts, having MargBooks on your side can save you from unnecessary tax trouble.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span><strong>Final Thoughts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 56(2)(vii) of Income Tax Act may appear stringent at first glance, but with the correct knowledge of its exceptions, you can safely receive gifts without fearing a tax bill.<\/p>\n\n\n\n<p>Here\u2019s a quick recap of when gifts are NOT taxable:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If received from relatives<br><\/li>\n\n\n\n<li>On the occasion of marriage<br><\/li>\n\n\n\n<li>Through inheritance or will<br><\/li>\n\n\n\n<li>From local authorities or registered trusts<br><\/li>\n\n\n\n<li>In contemplation of death<br><\/li>\n\n\n\n<li>Under specific non-taxable transfers as per other sections<\/li>\n<\/ul>\n\n\n\n<p>While individual taxpayers should remain vigilant, businesses, too, must monitor asset movements with robust digital solutions. Tools, inventory management software, and online GST software, such as <a href=\"https:\/\/margbooks.com\/\"><strong>MargBooks<\/strong><\/a>, ensure that you&#8217;re not only tax-compliant but also digitally empowered.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Not all gifts are created equal, nor are they perceived as such. While receiving a gift might seem like a straightforward and joyful experience, the Income Tax Act of India has a few strings attached, especially when it comes to taxation. One such provision that often raises questions among individuals and professionals is Section 56(2)(vii) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":8867,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1948],"tags":[1229,201],"class_list":["post-6487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax","tag-gst-return-filing","tag-online-billing-software"],"blocksy_meta":[],"blog_post_layout_featured_media_urls":{"thumbnail":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-150x150.jpg",150,150,true],"full":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc.jpg",1200,576,false]},"categories_names":{"1948":{"name":"Income Tax","link":"https:\/\/margbooks.com\/blogs\/category\/income-tax\/"}},"tags_names":{"1229":{"name":"GST return filing","link":"https:\/\/margbooks.com\/blogs\/tag\/gst-return-filing\/"},"201":{"name":"online billing software","link":"https:\/\/margbooks.com\/blogs\/tag\/online-billing-software\/"}},"comments_number":"0","wpmagazine_modules_lite_featured_media_urls":{"thumbnail":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-150x150.jpg",150,150,true],"cvmm-medium":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-300x300.jpg",300,300,true],"cvmm-medium-plus":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-305x207.jpg",305,207,true],"cvmm-portrait":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-400x576.jpg",400,576,true],"cvmm-medium-square":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-600x576.jpg",600,576,true],"cvmm-large":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-1024x576.jpg",1024,576,true],"cvmm-small":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc-130x95.jpg",130,95,true],"full":["https:\/\/margbooks.com\/blogs\/wp-content\/uploads\/2025\/07\/Section-56cc.jpg",1200,576,false]},"_links":{"self":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/6487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/comments?post=6487"}],"version-history":[{"count":1,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/6487\/revisions"}],"predecessor-version":[{"id":6491,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/posts\/6487\/revisions\/6491"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/media\/8867"}],"wp:attachment":[{"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/media?parent=6487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/categories?post=6487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/margbooks.com\/blogs\/wp-json\/wp\/v2\/tags?post=6487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}