INTERVIEW QUESTIONS TAX GIFT TAX DETAILS

Question: Why was an abolished Gift tax restored?

Answer: The original Gift Tax Act, 1958 laid down tax rules for gifts received by individuals and HUFs.

It was abolished in 1998 as a tax relief measure for middle class tax payers who gave and received gifts.

But when a lot of people, particularly business owners, stated misusing this system to launder money, accumulate black money, and create benami properties in the name of non-relatives, the finance ministry decided to step in to prevent further misuse. In order to that, they incorporated a gift tax system Section 56(2) of Income Tac Act, 1961.

The original Gift Tax Act, 1958 laid down tax rules for gifts received by individuals and HUFs.

It was abolished in 1998 as a tax relief measure for middle class tax payers who gave and received gifts.

But when a lot of people, particularly business owners, stated misusing this system to launder money, accumulate black money, and create benami properties in the name of non-relatives, the finance ministry decided to step in to prevent further misuse. In order to that, they incorporated a gift tax system Section 56(2) of Income Tac Act, 1961. Source: CoolInterview.com

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