Everyone is happy to receive gifts. Along with this, the worry of tax also increases. Imagine, how happy you will be if a friend or relative gives you an expensive gift.. isn’t it?
But do you know that you may have to pay tax on such gifts (Gift Tax in India)? Yes, the government has made some changes in the rules of gift tax, which is going to directly affect your pocket.
This will affect those people more who often give or receive expensive gifts. If you are going to give or receive a gift, then you should know about the Income Tax Rules. So let’s know…
Provide information about income from gifts while filing ITR
Under the gift tax rules, you will have to pay tax on certain gifts. In India, gifts are considered income from other sources and can be taxed under the Income Tax Act, 1961. However, taxpayers have to disclose all these gifts while filing returns (ITR).
Gifts up to Rs 50,000 are tax-free
According to the rules, gifts up to Rs 50,000 are tax-free. This means that if you receive a gift of more than Rs 50,000 from any one person in a year, then you will have to pay tax on the amount that exceeds Rs 50,000.
Which gifts will be taxed?
- If you receive a gift of more than Rs 50,000 from any one person in a year, you will have to pay tax on the amount that exceeds Rs 50,000.
- If you receive a gift from a distant relative or friend, it will be considered taxable.
- If you receive any gift for advertising or promotion, its value will be included in your income and will be taxed.
Which gifts will not be taxed?
- There is no tax on gifts received from family relations such as spouse, parents, siblings, grandparents and children, irrespective of their value.
- Gifts received on special occasions like marriage or religious ceremonies are eligible for a discount of up to Rs 3 lakh.
- Gifts honoured by the President, Vice President, Governor or the Government are also tax-free.
