23 September 2014
DEAR SIRM I WANT TO KNOWN THAT IF CAN I RECEIVE A A/C PAYEE CHEQUE OF RS. 5 LAC FROM FROM FRIEND AS A GIFT. WHAT ARE THE TREATMENT UNDER GIFT TAX. AND HOW TO AVOID THE INCOME TAX APPLICABLITY.
23 September 2014
If you receive Rs 5 Lacs as gift from friends the entire amount will be taxable in your hand under the Head Income from Other Sources.
Under provisions of Section 56(2) of the Income Tax Act, 1961, any sum of money exceeding Rs. 50,000 received without consideration by an individual or a HUF from any person is chargeable to tax as income under “other sources” subject to certain exclusions. Hence, if you receive gifts from 2 different friends of Rs. 35,000 and Rs. 15,000 in a year, then you will exempted and need not pay tax on this amount, as it does not exceed Rs. 50,000. But if a third friend gifted you Rs. 100 in the same year, then you would have to pay tax on the entire Rs. 50,100 as your tax rates applicable to you.
23 September 2014
gift received from any relative is exempt as such and you will not need to pay any gift tax on the same. So for example, your father gifts you a cheque of Rs. 400,000 for you to start your new business, then no gift tax would need to be paid on this amount. However, relative does not imply anyone who is related to you (no matter how distant they are), but the Income Tax also defines who will be considered a relative to be exempt under its provisions.
Relatives u/s 56(2)(vii) from whom Gift is permissible under Income Tax Act, 1961 (i) spouse of the individual; (ii) brother or sister of the individual; (iii) brother or sister of the spouse of the individual; (iv) brother or sister of either of the parents of the individual; (v) any lineal ascendant or descendant of the individual; (vi) any lineal ascendant or descendant of the spouse of the individual; (vii) spouse of the person referred to in clauses (ii) to (vi)
Further, gift of any value received from anyone on the occasion of marriage is exempt from Tax.
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