Taxability of Gift Under Income Tax Act 1961

Gift tax in India applies to individuals receiving gifts in cash, property, or specified assets. Understanding the taxation rules on gifts is essential to ensure compliance with the Income Tax Act, 1961. This blog will discuss about Income Tax on Gift provisions related to gift taxation and exemptions.
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Taxability of Gift

Cash
Received without Consideration Aggregate Value > 50K – Taxable whole amount – Aggregate Value
Immovable Property
Without Consideration – Stamp Duty Value > 50K – Taxable (SDV) – Individual Property Wise
Inadequate Consideration – If (Consideration – SDV) > 10% of Consideration AND (Consideration – SDV) > 50K – Taxable (IC) – Individual Property Wise
Property Other Than Immovable Property
Without Consideration – Aggregate FMV > 50K – Taxable (FMV) – Aggregate Value
Inadequate Consideration – Aggregate FMV – Amount paid > 50K – Taxable (IC) – Aggregate Value

Meaning of Property

Immovable Property
Shares and Securities
Archaeological collections
Drawings, paintings, or any work of art
Sculptures
Virtual Digital Asset

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Jewelry

Jewelry includes:

Made of gold, silver, platinum, or any other precious metal – May or may not contain precious or semi-precious stones, whether or not worked, whether or not sewn into wearing apparel
Alloy of one or more precious metals
Precious or semi-precious stones, whether or not set in any furniture, utensils, or other articles, worked or sewn into any wearing apparel.

Exception – Gift Not Taxable
1. From Relative:

For Example –

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2. On the Occasion of Marriage

At the time of Marriage – Not Taxable
At the time of remarriage- With Same Girl – Taxable
At the time of remarriage- With other Girl – Not Taxable
At the time of the marriage anniversary – Taxable

3. COVID-19 Related Exclusion:

Individual – From Any Person – for Expenditure on Medical Treatment of COVID-19 (Self/Family Member)
Family Member of Deceased (Due to COVID-19)
From Employer within 12 months from the date of death – Any Amount
From any other person within 12 months from the date of death – Any Amount up to 10 Lacs Aggregate

4. Will or Inheritance

5. In Contemplation of the Death of the Payer

6. Gift from Local Authority as referred u/s 10(20):

Panchayat
Municipality
Municipal Committee and District Board

7. Gift from Institution as referred u/s 10(23C) or 12A:

Trust
Hospital
Educational Institutions

8. Gift from an Individual by a Trust Created or Established Solely for the Benefit of a Relative of the Individual.

Conclusion

Understanding the taxation rules on gifts helps in better financial planning and tax compliance. While gifts received from relatives and on specific occasions are exempt, other gifts exceeding ₹50,000 are taxable. It is crucial to maintain proper documentation to avoid any income tax implications.

Why Choose E Accountax Manager?

E Accountax Manager helps individuals and businesses with tax compliance, including gift tax regulations. Our experts provide clear guidance and seamless filing assistance, ensuring you adhere to the latest tax laws while maximizing tax benefits. Contact us today at E Accountax Manager for hassle-free tax solutions!

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