Circular No. 304

Whether gifts in kind are eligible for exemption under clause (v) of sub-section (1)

What this is

Circular No. 304 was issued by the Central Board of Direct Taxes on 2 June 1981. 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

Withdraws the restriction of the gift-tax exemption to cash gifts. Circular No. 284 dated 13 October 1980 had taken the view on the point; on reconsideration the Board withdraws it. The position stated is that the exemption under section 5(1)(v) is not confined to donations in cash or money but applies to all types of property, movable or immovable.

Why it was issued

The Board reconsidered the view it had taken in the earlier circular of 13 October 1980.

Who it reaches

Donors making gifts in kind that qualify under section 5(1)(v)
Donees receiving movable or immovable property
Gift-tax Officers who had applied the earlier circular

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

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)
1. Attention is invited to Circular No. 284, dated 13-10-1980 issued by the Board from F. No. 340/9/80-GT [Annex] on the above subject.
2. On reconsideration of the matter, Circular, dated 13-10-1980 stands withdrawn. In other words, exemption under section 5(1)(v) is not confined to donations in cash/money only but is applicable to all types of properties, movable or immovable.
Circular : No. 304 [F. No. 331/12/80-GT], dated 2-6-1981.

What to watch

This is a gift-tax circular, not an income-tax one.
It withdraws Circular No. 284 dated 13 October 1980 outright, so that circular is no authority for confining the exemption to money.
The circular settles only the form of the gift; the other conditions of section 5(1)(v) still have to be met.
Gifts in kind bring a valuation question with them, which the circular does not address.

Where you meet it

In a gift-tax assessment where an exemption claimed on a gift of property is refused on the ground that only cash gifts qualify.

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. 305 · Circular No. 303 →

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.