Skip to main content

Gifts and Tax

 

IT IS human nature to be happy when one gets a gift, whether on certain occasions or otherwise.


However, one also has to accept that there are associated income tax implications under the IncomeTax Act, 1961 (the Act) on certain gifts.

It may be recalled that earlier, gifts were taxable in the hands of the donor under the Gift-Tax Act, 1958, which continued for around 40 years until it was repealed in 1998.

Subsequently, in 2004, taxability of gifts was reintroduced as part of the Act and were made taxable in the hands of the recipient, and effective from September 2009, the scope of taxability provisions in connection with gifts has been widened.


Taxability of gifts: As per the provisions of Section 56(2)(vii) of the Act, specified gifts received by an individual or Hindu Undivided Family (HUF) are taxable under the head "income from other sources" in the hands of the recipient, subject to the monetary limits and other conditions specified therein.

As has been specified in the Act, gifts would mean any sum of money; immovable property, such as land or building or both; shares and securities; jewellery; archaeological collections; drawings; paintings; sculptures; any work of art; or bullion.

In case of any sum of money received, the aggregate value of which is in excess of Rs 50,000, the whole amount is taxable in the hands of the recipient.

In a case, where any immovable property is received as gift without consideration, the stamp duty value of which exceeds Rs 50,000, the stamp duty value of such property would be taxable in the hands of the recipient.

Where a property, other than immovable property is received with out any consideration and the aggregate fair market value (FMV) of which is in excess of Rs 50,000, the entire FMV would be con sidered as income of the recipient in accordance with regulations. For ex ample, in case you receive any jewellery, shares or any other movable property covered within the provisions of the law, then the FMV of such gifts would be computed in accordance with the prescribed regulations and accordingly taxed.

Exceptions: The income tax authorities have also provided a breather from tax by providing for cer tain exceptions in relation to receipt of gifts. Some of the exceptions have been specified below: Gift received from a rel ative would not be consid ered as taxable in the hands of the recipient, ir respective of the value of the gift. The act has speci fied that relatives would include the spouse of the individual; brother or sis ter of the individual; brother or sister of the spouse; brother or sister of either of the parents of the individual; any lineal ascendant or descendant of the individual; and any lineal ascendant or descendant of the spouse.

Gifts received on the occasion of marriage of an individual, whether received from relatives or non-relatives, irrespective of the monetary limit.

Gifts received under a will or by way of inheritance.

Gifts received in contemplation of the death of the payer or donor.

Gifts given by the employers to their employees, if the value of the gift is less than Rs 5,000 in aggregate during the tax year.

Therefore, gifts received under any of the above situations will be considered exempt from tax in the hands of the recipient.

It can, therefore, be seen that the relevant awareness and understanding of tax provisions relating to gifts would be helpful in order to understand its implications and to be in compliance with tax laws.
 

Popular posts from this blog

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...
Read more

NPS Investment Choice for Safe Investors

Invest NPS Online       Whether they invested through SIPs or put in a lump sum amount, risk-averse individ uals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9.75% annualised returns while corporate debt funds have churned out more than 11% in the past five years. As a result, the average return for ultra-safe investors in the past five years is in double digits. Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years.These funds have done well because interest rate cuts have pushed down bond yields. But experts say this trend will not stay forever. NPS is a long-term investment and the bonds are predominantly held to matu...
Read more

ICICI Pru Constant Maturity Gilt dividend

Invest ICICI Prudential Constant Maturity Gilt Fund Online ICICI Prudential Mutual Fund   has announced dividend under the following schemes: Scheme Dividend ( R /unit) ICICI Pru Constant Maturity Gilt-DQ 0.26543239 ICICI Pru Constant Maturity Gilt Direct-DQ 0.27171609 ICICI Pru Q Interval Plan I-D 0.10617296 ICICI Pru Q Interval Plan I Direct-D 0.10703967 ICICI Pru Q Interval Plan I Ret-D 0.10617296             The record date has been fixed as June 13, 2016.   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) ...
Read more

Buy Health Insurance Plan even if you are covered with my Employer

Buy Health Insurance Plan Online Yes, getting a private insurance cover now, which extends beyond your retirement age, is recommended There are a few reasons why buying a health insurance plan may make sense even though you get medical insurance from your employer. Here are the points you need to think about. Firstly, your employer's insurance coverage will only protect you as long as you are employed with the company. The policy will terminate when you quit the job or when you retire. Post retirement is perhaps the phase when one needs it the most but you won't have it then. Moreover, buying a new insurance policy after the age of 50 means that there will be no coverage for pre-existing diseases.   Lastly, health insurance policy you get from your employer may or may not cover your dependants. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver M...
Read more

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now