725/CBDT. - Income Tax - 725/CBDT

INSTRUCTION NO. 725/CBDT Dated : July 27, 1974 Section(s) Referred: 18A Statute: Gift Tax Act, 1958 In terms of Section 18-A of the Gift-tax Act where Stamp-duty paid on an instrument of gift of property in respect of which gift-tax payable exceeds Rs.1,000 the assessee is entitled to deduction from the gift-tax payable by him of the lesser of (a) an amount equal to the Stamp-duty paid (b) one half of the sum by which gift-tax payable before making deduction towards stamp duty exceeds Rs.1,000. 2. A question that arises in application of Section 18-A is regarding the meaning of the expression "gift-tax payable" occurring in that Section. There is no explanation to Section 18-A as in the case of Section 18 which lays down the method of computing the amount of tax due on each of the gifts if a person makes more than one taxable gift in the course of a previous year. 3. The Board are advised that as gift-tax is levied upon the aggregate of taxable gifts made by an individual and not upon individual transactions, the gift-tax payable in respect any particular property for the purpose of Section 18-A, should be calculated as under:- (a) gift-tax payable on the aggregate of the taxable gifts made during the previous year should first be calculated according to the rates prescribed in the schedule to the Gift-tax Act; (b) gift-tax payable in respect of any property should be calculated on the basis of the average rate of tax, the average rate being: gift-tax demand before giving credit for any payment ---------------------------------------------------- taxable gifts to which the schedule of rate is applied. (c) The credit for stamp duty paid in respect of any property should then be given with reference to the gift-tax payable on that property as worked out in (b). The contents of this instruction may please be brought to the notice of all the officers working in the charge.