Circular No. 284 — Whether gifts in kind are eligible for exemption under clause (v) of sub-section (1)

What this is

Circular No. 284 was issued by the Central Board of Direct Taxes on 13 October 1980. Its subject is Whether gifts in kind are eligible for exemption under clause (v) of sub-section (1).

This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.

What it does

Holds that a gift other than a sum of money is not eligible for exemption under section 5(1)(v) of the Gift-tax Act. That clause exempts gifts to an institution or fund established or deemed to be established for a charitable purpose to which section 80G of the Income-tax Act applies. Explanation 5 to section 80G, inserted by the Finance Act, 1976 with effect from 1-4-1976, declares that no deduction is allowed under that section unless the donation is of a sum of money. Since section 80G can apply only to a money donation, the Board, advised in consultation with the Ministry of Law, reads the gift-tax exemption as similarly confined.

Why it was issued

The question whether gifts in kind qualified for the section 5(1)(v) exemption was considered by the Board with the Ministry of Law.

Who it reaches

Donors making gifts in kind to charitable institutions
Charitable institutions and funds receiving such gifts
Gift-tax Officers examining an exemption claim

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.5	s.5
s.80G	s.133, s.332, s.354

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

Whether gifts in kind are eligible for exemption under clause (v) of sub-section (1)
ANNEX - CIRCULAR NO. 284, DATED 13-10-1980 REFERRED TO IN CLARIFICATION
1. The question as to whether gifts in kind made by any person would be eligible for exemption under section 5(1)(v ) has been considered by the Board in consultation with the Ministry of Law.
2. The Board have been advised that a gift other than a sum of money would not be eligible for such exemption in view of the Explanation 5 to section 80G of the Income-tax Act inserted by the Finance Act, 1976, with effect from April 1, 1976.
3. Explanation 5 to section 80G of the Income-tax Act provides : "For removal of doubts, it is hereby declared that no deduction shall be allowed under this section in respect of any donation unless such donation is of a sum of money." Under section 5(1)(v) gift-tax shall not be charged in respect of gifts made "to any institution or fund established or deemed to be established for a charitable purpose to which the provision of section 80G of the Income-tax Act, 1961 apply". Since the provisions of section 80G would be applicable only in respect of the donation or gifts which would be a sum of money as per Explanation 5 thereof, it follows that exemption, under section 5(1)(v) of the Gift-tax Act, would also be restricted to such gifts.

What to watch

This is a Gift-tax Act circular; the exemption is under section 5(1)(v) of that Act and it borrows its limits from section 80G of the Income-tax Act.
The reasoning depends on Explanation 5, which runs from 1-4-1976, so it does not touch earlier gifts.
A gift of shares, land or goods to a charity is outside the exemption on this view, however worthy the object.
Gift-tax is no longer levied under that Act, so this bears only on old assessments.

Where you meet it

On an old gift-tax assessment where a donation of property, not money, to a charitable fund is claimed to be exempt.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 13/2024 [F.No. C-14011/41/2018-V&L] / SO 312(E) — Ministry of Finance 19 January 2024
Notification No. 12/2024 [F.No. C-14011/46/2018-V&L] / SO 311(E) — Ministry of Finance 19 January 2024
Circular No. 22/2022 — Condonation of delay under section 119 2 b of the income tax act 1961 in filing of form no.10a 1 November 2022
Notification No. 93/2021 [F.No. 370142/34/2021-TPL(Part III)] / GSR 578(E) — Ministry of Finance 18 August 2021
Circular No. 3/2021 — Circular under section 10 of the direct tax vivad se vishwas act 2020 4 March 2021
Circular No. 21/2020 — Clarifications on provisions of the direct tax vivad se vishwas act 2020 4 December 2020

← Circular No. 285 · Circular No. 283 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.