Section 92(2)(m) of the Income Tax Act, 2025 provides that where any person receives any sum of money or property without consideration or for inadequate consideration, the same may be chargeable to tax under the head "Income from other sources". Rule 58 of the Income Tax Rules, 2026 prescribes specific classes of persons and transactions that are excluded from the application of these provisions. Understanding these exemptions is essential for taxpayers and practitioners.
The Statutory Framework
Section 92(2)(m)
Section 92(2)(m) provides that where any person receives in any tax year, from any person or persons【92†L0】:
- Any sum of money without consideration, the total of which exceeds ₹50,000, the whole of such sum
- Any immovable property without consideration or for inadequate consideration, the stamp duty value or excess thereof
- Any property, other than immovable property, without consideration or for inadequate consideration, the aggregate fair market value or excess thereof
Shall be chargeable to tax under the head "Income from other sources".
Section 92(3)
Section 92(3) provides that the provisions of Section 92(2)(m) shall not apply to any sum of money or any property received from such class of persons and subject to such conditions, as may be prescribed【92†L0】.
Rule 58: The Five Categories of Exemptions
Rule 58 prescribes five categories of persons and transactions exempt from Section 92(2)(m):
Category 1: Residents of Unauthorised Colonies in Delhi
Class of Persons: Resident of an unauthorised colony in the National Capital Territory of Delhi
Nature of Asset: Any immovable property being land or building or both
Conditions: Where the Central Government, by notification, regularised the transactions of such immovable property based on the latest power of attorney, agreement to sale, will, possession letter, and other documents evidencing payment of consideration for conferring or recognising right of ownership or transfer or mortgage
Category 2: Shareholders in Tribunal-Approved Restructuring
Class of Persons: Shareholder
Nature of Asset: Any movable property, being unquoted shares, of a company or its subsidiary
Conditions: Where the Tribunal, on an application moved by the Central Government under Section 241 of the Companies Act, 2013, has suspended the Board of Directors and appointed new directors nominated by the Central Government under Section 242, and the shares have been received pursuant to a resolution plan approved by the Tribunal
Category 3: Investors in Yes Bank Reconstruction Scheme
Class of Persons: Investor or the Investor bank
Nature of Asset: Any movable property, being equity shares, of the reconstructed bank
Conditions: Where the said share has been allotted by the reconstructed bank under the scheme at a price specified in paragraph 3(3) of the Scheme
Category 4: Strategic Disinvestment
Class of Persons: Any person from a public sector company or the Central Government or any State Government
Nature of Asset: Any movable property, being equity shares of a public sector company or a company
Conditions: Such shares have been received under strategic disinvestment
Category 5: Fund Management Entity Relocation
Class of Persons: The fund management entity of the resultant fund
Nature of Asset: Any movable property, being shares or units or interest in the resultant fund
Conditions: The shares or units have been received in lieu of shares or units or interest held by the investment manager entity in the original fund, pursuant to relocation, subject to:
- Not less than 90% of shares or units or interest in the fund management entity of the resultant fund are held by the same entities or persons, in the same proportion as held by them in the investment manager entity of the original fund
- Not less than 90% of the aggregate of shares or units or interest in the investment manager entity of the original fund was held by such entities or persons
Section 79 Exemptions
The provisions of Section 79 shall also not apply to the transfer of any movable property of the nature mentioned in Category 2 where the conditions mentioned therein are satisfied.
Expert Legal Guidance
Understanding the exemptions from angel tax-style provisions is essential for taxpayers and practitioners. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping taxpayers navigate the exemption provisions and ensure compliance with Section 92(2)(m).