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

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Stock Review: Havells

HAVELLS India's stock performance has been muted in the past three months, in line with the weak broader market. But, given the turnaround in its overseas subsidiary and the launch of new products in its consumer durable business, the company's stock may undergo a re-rating.    Havells is India's leading consumer electrical goods company, with consolidated sales of . 5,527 crore in the past four quarters. Its wholly-owned subsidiary Sylvania, which makes lighting and fixtures, has established brands in European, Latin American and Asian markets. Sylvania repre sented nearly half of the company's consolidated revenues in the first half of FY11.    Sylvania's poor financials hit Havells' consolidated performance in FY10. But, this has changed in the cur rent fiscal. Havells has reduced fixed costs of Sylvania by exiting from unprofitable businesses and outsourcing manufacturing to low-cost locations such as India and China. In the September 2010 quarter, Sylv...
Read more

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...
Read more

Health for Wealth - How to buy Health Insurance ?

Tax Saving Mutual Funds Online Current open Infra Bond Application form   HEALTH insurance is a relatively new phenomenon in India. Hence, it is not on the top of the mind for most people to make a conscious commitment towards health insurance. However, it is imperative for each one of us to plan for better health for our families and ourselves. There's no better way than to start with making health your top priority this year. So, your health insurance resolution charter would look something like: ■ Invest in health for wealth: Timely investment in health insurance can help build a security net and hedge sudden dilution of another financial asset class in the event of a health emergency, making it imperative to opt for a comprehensive health insurance plan. ■ Buy a comprehensive health cover that fu lfills your health needs for life: Buy a personal health insurance cover even if you have an employee cover because 'employer provided' health insuranc...
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