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were taxable in the hands of the donor under the Gift-Tax Act, 1958, which continued for around 40 years until it was repealed in 1998.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

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ 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  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
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