If you receive a gift
from any of your relatives or friends for Christmas or New Year or Pongal or
any festival, worth more than Rs. 50000, as per income tax laws, it may be taxable income on your hands in
certain situations.
Not only the income, if
a person receives a gift, if the value of the gift is exceeding the certain limit then he/she must
add it in his income and pay the income tax. There are certain exceptions on
declaring the gifts as income.
Gifts received From
Relatives
As per the Income tax act, the Gifts received from any of your relatives
are fully exempt from tax. Whether you are received the gifts as Cash, Cheque
or any goods. You are not liable to pay the tax for these gifts. Here the
“relatives” term defines by the Income Tax act as follows :
·
Spouse of the individual
·
Brother or sister of the
individual
·
Brother or sister of the spouse of the individual
·
Brother or sister of
either of the parents of the individual
·
Any lineal ascendant or
descendant of the individual
·
Any lineal ascendant or
descendant of the spouse of the individual, Spouse of the person referred to in clauses (ii) to (vi).
For example if you are
receiving gift of Rs.100000 from your uncle (your mother’s brother), it is
fully exempt from the Tax. Whenever you get the gifts please apply the
relations in the above list to ascertain whether you are liable to pay any tax
for the received gift.
Gifts received From
Non-Relatives
Here non-relatives means
anyone who doesn’t come under the above mentioned relation for you. In this
case you are tax exempt up to maximum of Rs.50000 for a financial year. If you
receive the gift worth more than Rs.50000, you are liable to pay the tax
whatever you received excess of the limit. This rule applies when the gift is a
sum of money, whether in cash, by way of cheque, bank draft or any articles
which is value more than the Rs.50000.
For example you are
receiving a gift of Company Shares from one of your team
mate in your company or when you are receiving a gift of Rs.100000 (cheque) for
the best performing in your company (not a bonus), Rs.50000 is liable to pay
tax
My mother gifted me Rs.
X amount. Is this taxable?
The simple answer is
“NO”. Any gift in the form of articles, shares or cash are not taxable on your
hand. If you want to understand the gift relatedincome tax laws, Under section
56 of the Income-tax Act, any money received without consideration which is
exceeding Rs. 50000 is taxable on your hand. But, there is exception on certain
situations.
The money is received
from a relative, which includes, among others, any lineal ascendant or
descendant of the individual is fully tax exempt on your hand. So, it is very
clear that money received from your mother or father would be not taxable on
your hand.
Another important point,
if you want to claim the tax exemption on the gifts, please make sure that you
have the gift deed executed and who is gifting signed on the papers. Without
that the gift laws are not valid for claiming the exemptions. You may consult a
lawyer for the documentation with respect to the gift transaction.
Marriage Gifts
One very happy feature
of the provision of taxation of gifts is that any gift received from any person
on the occasion of the marriage of the gift’s recipient would not be liable to
income tax. There is no monetary limit attached to this exemption. Note that, if you receive any gifts at the time
of engagement or the marriage anniversary if liable to pay the tax.
Special Tax Exempt gifts
The following list of
gifts are fully exempted from Tax whether the it is received as Cash, or any
other form of the material doesn’t affect the exemption.
1. Gift received under a Will or by way of
inheritance
2. Gift in contemplation of death of the donor;
Gift from any local authority
3. Gift from any fund or foundation or university
or other educational institution or hospital or any trust or any institution
referred to in Section 10(23C)
4. Gift from any trust or institution, which is
registered as a public charitable trust or institution under Section 12AA
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