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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...
Read more

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

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 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Read more

Good time to invest in Infrastructure Funds

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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
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