Not every rupee that comes into your bank account is a salary, rent, or business profit. Sometimes it’s a gift, sometimes property, sometimes money received without much explanation. The question is: should these be tax-free?
The Income Tax Act answers this with Section 52(2)(x). It’s a provision created to separate genuine personal transfers — like gifts from close family or inheritances — from suspicious transactions that could otherwise be used to avoid tax.
What Section 52(2)(x) Really Says
In simple terms:
- If you receive money, immovable property, or certain specified assets, tax may apply.
- The following receipts shall be taxed in the hands of any person where received from any person or persons on or after the specified date.
- There’s a safety limit: if the value does not cross ₹50,000, no tax.
- However, Section 52(2)(x) exempts such transactions from tax implications if they fall in the “safe zone” (gifts from relatives, marriage, inheritance, etc.).
So, the law doesn’t stop you from receiving gifts. It just prevents people from misusing the idea of “gift” to move untaxed money around.
Why This Section Was Needed
Before this, gifts & property transfers were loosely regulated. People took advantage by showing business income as gifts, or by transferring undervalued property.
By bringing in Section 52(2)(x), the government closed that gap. Now:
- High-value receipts are monitored.
- Only genuine exemptions remain."
- And tax evasion through “friendly gifts” is harder.
Also Read: Tax on Gifts, Cash, and Property Received Without Consideration
Key Highlights of Section 52(2)(x)
- 📌 Covers both money & property.
- 📌 Threshold of ₹50,000 – beyond this, the law applies.
- 📌 Exemptions – relatives, marriage gifts, inheritance, trusts.
- 📌 Wider reach – applies to any person from any person.
- 📌 Includes special provisions relating to voluntary contributions received by electoral trust.
Example That Explains It Best
Imagine this.
Mr. Kumar gets ₹10 lakh from a business acquaintance, Mr. Anderson. No relation, no occasion. Just a “gift.”
- Since they are not relatives, and the value is above ₹50,000, Kumar will have to pay tax on it under Section 52(2)(x).
- If the same amount had been given by his father, it would fall under exemptions and remain tax-free.
That’s how the section draws the line between genuine & questionable transfers.
How It Differs from Other Rules
|
Provision |
Scope |
Tax Treatment |
Who It Affects |
|
56(2)(x) |
Gifts above ₹50,000 to individuals/HUFs |
Taxable |
Salaried individuals, HUFs |
|
52(2)(x) |
Broader – money/property received by any person |
Taxable beyond limits |
Any person, not restricted |
|
Electoral Trusts |
Voluntary contributions |
Exempt if transparent |
Political trusts, donors |
This makes Section 52(2)(x) a wider net compared to Section 56(2)(x).
Also Read: Tax on Gifts and Share Transactions
The Electoral Trust Factor
An interesting part of this law is its link with political funding.
- Special provisions relating to voluntary contributions received by electoral trust are built into it.
- Transparent contributions are exempt.
- Hidden or misreported ones may attract tax.
This was done to make sure even political donations stay accountable.
Why It Matters in 2025
Fast-forward to today. Digital transfers, instant payments, global remittances — money moves fast. Without provisions like 52(2)(x), it would be too easy to move unaccounted funds as “gifts” or undervalued property deals.
This section keeps the system clean by:
- Taxing suspicious receipts.
- Allowing genuine ones.
- And improving transparency in both private & political transactions.
Points to Keep in Mind
- ✅ Limit is ₹50,000.
- ✅ Recipient pays tax, not the giver."
- ✅ Relatives, inheritance, and marriage = exempt.
- ✅ Keep records for proof in case of queries.
Also Read: Gift of tax relief on investment in NPS!
Conclusion
Section 52(2)(x) of Income Tax Act is designed to balance personal freedom with accountability. It applies to the receipt of money or property & ensures that the following receipts shall be taxed in the hands of any person where received from any person or persons on or after the set date. At the same time, it makes sure genuine transfers remain exempt.
From preventing tax abuse to keeping electoral funding transparent, this provision is central to fair taxation in India.
👉 Want to know if your gifts, property receipts, or contributions fall under the taxable or exempt category? Visit Callmyca.com today. The right advice now can save you both money and future notices.
