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were taxable in the hands of the donor under the Gift-Tax Act, 1958, which continued for around 40 years until it was repealed in 1998.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

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com
Read more

HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO will be open for subscription from 16th May 2014 to 30th May 2014. The key features of the scheme are as mentioned below:   Type of Scheme A Close Ended Capital Protection Oriented Income Scheme Benchmark Crisil MIP Blended Index Fund Manager Mr. Anil Bamboli , Mr. Vinay R Kulkarni & Mr. Rakesh Vyas New Fund Offer (NFO) Period 16 th May 2014 to 30 th May 2014. Minimum Application Amount Rs. 5000 and in multiples of Rs.10 thereafter Plans/ Options Offered Growth and Dividend Payout Facility Liquidity To be listed For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
Read more

How Tax Deducted at Source (TDS) works?

    THE tax season is here. And if you are an employee you can't blame your employer for deducting large chunks of money from your salary towards tax deducted at source ( TDS ), which he is legally obliged to do. Your bank will also deduct some percentage from your FD interest of Rs 10,000 or more towards TDS! So what is this TDS all about? How is it computed? Are there any changes this year? Read on... What is TDS? TDS reduces your taxable income and could even provide tax relief! The TDS collections account for 40 percent of the total taxes collected in the country. As the name suggests TDS is the amount of tax that is deducted at source in certain types of income . The TDS thus collected is deposited in the Government treasury within a specified time. How is it computed? Some of the types of income where TDS is applicable include salary, interest, rental fee, interest on securities, insurance commission, dividends from shares and UTI/Mutual Funds, commission and brokerage
Read more

How to PPF Account extension after maturity

A PPF account can be retained after maturity without making any further deposits. The balance will continue to earn interest till it is closed. Public provident fund or PPF remains one of the most popular savings options for the long term despite a gradual decline in interest rates over the years. PPF accounts have a maturity period of 15 years and they can be extended. If there is no fund requirement, financial planners say, PPF account holders should extend the account beyond 15 years. In terms of income tax implications, PPF accounts enjoy the benefit of EEE (exempt-exempt-exempt) status . Under Section 80C, contribution up to Rs 1.5 lakh in a financial year qualifies for income tax deduction. The interest earned and maturity proceeds are also tax free. What are your options when a PPF account matures? 1) A PPF account can be closed after the expiry of 15 financial years from the end of the year in which the account was opened. 2) The subscriber can retain his
Read more

SBI Magnum Taxgain

Grown 37 times in 23 years- SBI Magnum Taxgain Scheme   Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGet Rich on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com OR Call us on 94 8300 8300  
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