India is known as the city of festivals in which people are very usual to convert gifts to each other. Whether it is the festival of celebration or somebody’s birthday or anniversary people love to exchange the gifts to their relatives. But people not just exchange these gifts at the special moment people do give gifts to save their taxes on those gifts. But now you must have wondering how they can save taxes on those gifts so let’s try to understand that what this is exactly.
The gifts are not always considered as taxable and on the other hand some of the gifts can be taxable according to the income tax act. The gifts could be in the form of property (land, plant, and building) cash, shares of company, gold, jewellery or other but according to the provision of section 56(2) of the income tax act.
The gifts are not taxable if you receive in the particular financial year but the only condition are applicable is the amount of that gift should not be greater than the amount of Rs.50,000 or if the gift’s amount exceeds the limit of 50,000 than the whole amount of gift will be consider as taxable. If you receive the gift amounted 5lakh then you must have to pay tax 1.5lakh
Immovable property: – Tax on immovable property are based on the value of stamp duty of the immovable property which consideration amount should not more than the amount of 50000 otherwise the gift will be taxable.
Gift from the family member:- According to the section 56(2) of income tax act receiving the gift from the family member or any relatives than the gift will be exempt from tax . But there are just few relatives who qualify for this exemption and those relatives are siblings, spouse, siblings of the parents, and siblings of the spouse
The gifts from the friends are fully taxable.
Gift on marriage: – If the gifts are getting on the marriage then the gifts will be tax free. The gift should be received by the way of inheritance, contemplation of death of donor. All these ways of receiving the gift will be consider as tax free.
Do we need to show income from gift while filling the income tax return?
Yes we definitely have to how all the incomes in the income tax return if the income exceeds the income of 50,000. The income must declare under the head of “income from other source”.
