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Any gift amount over Rs 50,000 in a financial year is taxable

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GIFTING and receiving gifts is a matter of joy and affection. But receiving gifts can also land you in trouble if you are not aware of its tax implications. On the other hand, gifting for charity can provide you income-tax deduction.

Under Section 56(A) of the Income-tax Act, any amount exceeding Rs 50,000 received as gift in a financial year is taxable. As for movable property like art, jewellery, stocks and immovable property like land or building, gift received in a financial year of a value exceeding Rs 50,000 will be taxable. The tax will be applicable for the entire amount, not just the amount above the Rs 50,000 limit. So, if one received Rs 50,000 in a year, it will not be taxable, but if it is Rs 51,000, the entire amount becomes taxable, not just Rs 1,000.

However, there are exemptions when it comes to taxing gifts. A gift received from a relative is not taxed and these relatives include your spouse, your or spouse's brother and sister, brother or sister of your parents, your lineal descendant or ascendant and those of your spouse.

Wedding gifts from a relative or a non-relative too is not taxed. These gifts can be given either on the day of wedding or a few days before or after.

Any amount or property received under a will or by way of inheritance is not taxable. This can be received even from a non-relative. If a gifted property is located outside India, it will not come under the purview of gift tax.

Gifts received from a government body or local authority, university or other educational institutions, hospital or a registered public charitable trust, a foundation or fund are outside the purview of tax.

However, the income generated out of the gifted amount or property will invite tax.

As in case of any transaction, gifting should also be well documented.

It is always advisable to document the gifting to avoid future complications in terms of taxation or other disputes. A proper gift deed can be made on a stamp paper and got registered.

Even a simple letter from the donor with their PAN card details will be sufficient.

This has to be done in all cases of gifts received from relatives or non-relatives.

If it is an immovable property, documents pertaining to its purchase by the donor should be maintained. On the other hand, gifting for charity entitles you for tax deductions.

Charitable donations by individuals or organisations can claim tax deduction under Section 80G of the Income-tax Act.

Donations made to registered charity trusts, organisations or funds approved by the income-tax department can claim tax deductions.

Donations made to some funds like the prime minister's national relief fund or national defence fund are eligible for 100 per cent deduction and others can get a taxpayer deduction of 50 per cent. However, the deduction under the section is subject to an upper limit of 10 per cent of the gross total income.

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