Skip to main content

Are Gifts Taxable In India?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

Don't you remember your childhood days when you received gifts on your birthday and festivals? What joy it brought you .Don't you remember the Christmas season when you stayed up the whole night for Santa Claus to come on his Reindeer Drawn Sleigh brimming with gifts. Oh how you wished you could catch him sliding down your chimney to fill your stockings with gifts. When you were in college how happy you felt when Granddad gifted you a bike on your Eighteenth Birthday? .In Indian Tradition on festive occasions we gift our friends and relatives Mithais and Sweets. Don't you carry gifts of books and clothes when your friend invites you to his birthday party? .On Valentine's day don't you gift your beloved a Rose?. In India just as in the World, flowers are a popular means of expressing love and affection through gifts .In India the Wedding season is one in which vast quantities of gifts exchange hands. Gifts mainly include Jewelry, Electronic Items, Home Appliances, Cash, and Decorative items. Famous Politicians, Cricketers and Film Actors in India are gifted Cars, Property, Jewelry out of admiration by their followers and fans.

 

It would be wise to remember the saying "A Book Is A Gift, Which Can Be Opened Again And Again".

What Is Meant By Gift Tax In India?

·         A Gift in India is defined as a movable or an immovable property and made voluntarily without consideration of cash or kind and includes deemed gifts and conditions as provided in the Gift Tax Act 1958.

·         From October 1998 To August 2004 any amount received as a gift without consideration, no tax was levied either on the giver or the receiver. This was a period of rampant money laundering.

·         There rules were modified on October 1st 2009 to include Shares and Securities, Jewelry, Paintings, Drawings, Sculptures, and Archeological conditions. In case the aggregate fair value of the benefit received by way of a gift exceeds INR 50000 the gift would be taxable in the hands of the receiver. The 'any gift' clause means not only cash but also all gifts of value above INR 50000 are taken into consideration. Let us consider you receive a gift of a house worth 30 Lakhs in the financial Year 2012-2013. Then you are slotted in the highest income tax slab. So tax will be charged at (INR 130000 + 30% of the amount by which the total income exceeds 10 Lakhs).

 

What Are The Gifts That Are Not Taxed In India?

·         The gifts from parents, parent's siblings and their spouses, Siblings, Spouse Of Siblings, Daughter and Son, Spouse, Spouses Parents, Spouses Siblings and their respective spouse are not taxable in India. All the above categories are classified as relatives. We need to note that the gifts received by the daughter-in-law from her parents- in- law are tax exempt but the gifts received by a son-in-law from his parents-in-law are taxed.

·         If your relatives such as your sibling is an NRI then gifts received by you from them are tax free. The kind of gifts such as cash or jewelry or the purpose for which the gift is received is immaterial.

·         Gifts given on occasions such as marriage, inheritance via will, gifts from local authorities, gifts from registered Charitable trusts, Non Governmental Organizations, and Education Trust or a University are not taxed.

 

What Are The Gift Tax Rules In India:

·         As per Indian Law no tax is paid if the gift amount, either cash or kind is up to an amount of INR 50000.Let us consider this with an example. Raju was gifted a sum of INR 30000 in cash by his friend Rajesh. He does not have to pay tax on the sum gifted as it is less than INR 50000.Another friend Ravi gifts him INR 40000.The total sum of INR 70000 is now taxable. This amount is added to the income of Raju and he is taxed based on the income tax slab he falls under.

·         Let us consider you want to buy a house. Your father has transferred a sum of INR 30 Lakhs to your account. This money is not taxable under Gift Tax laws. Your father then needs to type a note on a paper which need not be stamped or registered. Your father just needs to mention the name of the person gifted to , the relationship with him/her and can state that this cash is given as love and affection towards my son.

·         If you are gifted even a Crore on the occasion of your marriage by a relative or a non relative you will not be taxed .Typically these gifts are handed a couple of days before or after the day of marriage.

·         If you receive property or cash as inheritance through a will then even if this amount is a Crore you will not be taxed.

 

Gift Tax On Movable/Immovable Property

Immovable Property:

·         Mr Gaurav received property from his cousin without any consideration. The value of the property was 50 Lakhs. A Stamp duty of 2 Lakhs had been payed on this property. Even though Mr Gaurav had received the property as a gift he is liable to pay tax on the stamp duty value since it exceeds INR 50000. This amount is added to the income of Gaurav and he is taxed based on the income tax slab he falls under.

·         If a property is gifted for a consideration, then the actual market value of the property is taxed.

 

Movable Property:

·         If the movable goods such as a car is gifted and its fair market value exceeds INR 50000 then this fair market is considered for gift taxation .If gifted for a consideration and fair market value exceeds INR 50000 ,then you will have to pay tax on the fair market value minus the consideration amount. Gift of movable property is stamped on a stamp paper by a notary or a court.. In case of immovable property the transfer is done by way of a registered instrument signed on the behalf of the donor .Gift of immovable property which is not registered is not valid as per law and the title cannot be transferred to the receiver.

 

Which Gifts Are Taxed In India?

·         The gifts received by a son-in-law from his parents-in-law are taxed.

·         The gifts received by minor children will be clubbed with the parents' income for taxation purposes. In case of clubbing it will be clubbed with the parent having the higher income.

·         .Let us consider your friend has a land worth INR 25 Lakhs. He gifts you this land . Both of you agree to undervalue the cost of this land as INR 15 Lakhs. Now you have to pay gift tax only on 15 Lakhs as you are the receiver. The government has land rate records based on the market ready reckoner rates. Now the government using the records catches you and charges tax on the difference between 25 Lakhs and 15 Lakhs which is 10 Lakhs .This amount has to be paid by you as you are the receiver of the land.

 

I would like to end this article with the famous saying "Never Look A Gift Horse In The Mouth". A gift is precious and has emotions attached to it. It enhances the value of both the receiver and the giver. So enjoy the gifts you receive and also the tax benefits on them.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

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...
Read more

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...
Read more

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 ...
Read more

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...
Read more

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 ...
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