Income Tax on Gifts

Income Tax on Gifts

Income Tax on Gifts

We all love receiving Gifts. Certain gifts received from our relatives are tax free. Gifts can be used as effective tax planning tools.

Detail provision on Gifts and their taxation is discussed below:

 

1. What is the current law on gifts tax? Priti Mittal, Jaipur

Any gift received in cash or kind exceeding Rs.50,000 or purchase of movable or immovable property for inadequate payment is taxed in the hands of recipient as “income from other sources.”

2. My Father has gifted Rs 100,000/- ? Do I have to pay tax? Sonia Agarwal, Hyderabad
Gifts received from specified relatives are exempt from Income Tax, and there is no upper limit also.

Father is included in the definition of relative, therefore amount received from him would be tax free.

3. Who is a relative in the eyes of the law? Prashant Gupta, Faridabad

A relative can be any of the following:

  1. Spouse of the individual
  2. Brother or sister of the individual, spouse or of either parent
  3. Lineal ascendants or descendants of individual or of spouse
  4. Spouse of person referred to in scenario 2 and 3 above

4. What are other conditions for receiving Tax-free Gifts? Surbhi Ghosh, Gurgaon

If you receive a gift on any of the following occasions, that gift will be tax free in your hands.

  • On occasion of the marriage of the individual
  • Under a will or by way of inheritance
  • In contemplation of death of the payer
  • Any local authority, trust or university etc.

5. What else do I keep in mind when I Receive Gifts? Vineet Sehgal, Delhi

While receiving a gift, its always in the interest of the donee (i.e., the recipient) to get a gift deed signed by the donor. This can always help support the case that the item was indeed a gift and can be used as evidence in case of future litigation/investigation by the Income tax department.

6. Can I gift Rs 1,50,000/- to my Husband or wife? Puneet, Noida

Yes you can gift to your husband or wife.

But, Please be careful that if your spouse invest this money and any gain like interest, Rent etc is received it would be clubbed with your income.

7. I have received Rs 45,000/- From my friend ? Is it taxable? Rakesh Sinha, Bangalore

No, since this is below, Rs 50, 000, it is not taxable.

However, if in the same tax year, you receive another gift of Rs 5,001. Now the total value of gifts received by you is Rs 50,001, and beyond the tax free limit.

Now the entire amount will be taxed as “income from other sources” in your hands.

8. Gift to Fiance is it taxable? S. Shanker, Hyderbad

If you have given gold necklace worth Rs 1,00,000 to your fiance. This entire amount is taxable in her hands, as jewellery (moveable property) above Rs 50,000 is taxable in the hands of the recipient.

In this case she is still not your wife, but only fiance, so the gift is taxable.

If you were married, and would have given the gift then no incidence of tax would have arisen.

9. What all are considered moveable and immoveable property? Prasenjit, Kolkata

The following are specifically defined as moveable or immoveable property:

  • Land or buildings
  • Shares and securities
  • Jewellery
  • Archeological collection
  • Drawings
  • Paintings
  • Sculptures
  • Any works of art

10. I have received Rs 1,00,000/- from my Father in law? Is it Taxable? Kamal Das, Noida

Since Father in law falls under definition of relative it is not taxable. But please make sure that amount he is giving to you , has been declared by him in his Income Tax Return

11. I want to Gift a House to my daughter in law. Is it taxable? Mohit Vaidya, Gurgaon

Daughter in law, falls under the definition of relative. Hence it is not taxable.

But, Please be careful that if your daughter in law gets House rent from this property and it would be clubbed with your income.

Income Tax on Gifts
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