GIFT is such an alluring term!! It’s always joyous to exchange gifts with your loved ones. May it be on occasions of elders visiting us, birthdays, anniversaries, success party or specially marriage. Then what restricts us from making high value transfers??? The implication of tax provisions will be the top reason working as a hindrance to free flow.
Not all gifts attract Income tax. Yes you read it right..We will decode some important transactions in detail and how you can use gifts as a tax saving tool.
Gift may it be cash or kind like jewellery, property etc are not taxable in your hands rather it is added to the income of person receiving the same. In other cases it is not added to the other person’s income instead added to your own income known as clubbing of income.
Gifts given to these people or under these circumstances are completely tax free
- If you receive gifts from any person which in one year does not exceed aggregate Rs.50,000/- no tax will be levied.
- Gifts received on the occasion of marriage. The gifts given to bride and groom as wedding gift, does not attract tax. Whether the gift is cash or any property or car or any other asset, it is completely tax free.
- Gifts exchanged with family or close relatives is also tax free. For this purpose family or relatives include
Your and your spouse’s brothers and sisters
Brothers and sisters of your parents
Lineal descendants (including spouses) of you and your spouse
- Anything received via will is also not taxable in hands of receiver. If you get some property or asset because of inheritance through will, you will not be required to pay taxes on any such receipt.
- Amount received by you because of your good work from Educational institutions or local authorities is also not required to be paid tax on.
Gifting is a joy and tradition and it should always remain so. Before restricting yourself from any such transactions, clarity on its impact shall be understood. Giving and receiving gifts to above mentioned relatives and in situations specified is not cross questioned by Income Tax Authorities, neither can anyone ask will ask you pay tax on. So enjoy and KEEP GIFTING.