26 October 2013
Upto Rs 50,000/year is not taxable
The first major rule which every person should know is that there is no tax to be paid on gifts received (cash or kind), if the amount of the gift is upto Rs 50,000 in a year. However if the total amount crosses Rs 50,000 . Then you will have to pay the tax on the total amount recieved (not additional). For example – If a friend of yours gifts you Rs 30,000 in a given year, you don’t have to pay any tax on that amount, as its below the limit of Rs 50,000 .
Now suppose you also get Rs 20,000 after that, still you don’t have to pay the tax as the total worth of the gift you got in the year was Rs 50,000 till now (less than the limit of Rs 50,000) . But now, if someone gifts you another Rs 10,000 . Your total gifts in a year is Rs 60,000, so you will have to pay tax on the total amount of Rs 60,000 , not just on additional Rs 10,000 . This Rs 60,000 will be included in your income and you will have to pay tax on this Rs 60,000, as per your tax slab. Note that this is exactly how the written law is.
Since 1/10/2009, Section 56(2) has been amended and the scope of ‘’gifts’’ will include even immovable properties or any other property besides sums of money under its ambit.
26 October 2013
Any amount received by relatives is not taxable at all
Another rule for income tax on gifts, is that any amount received from specified relatives is totally tax free in the hands of recipient. So if a relative gives you gift in form of cash/cheque or in consideration, you will not have to pay any tax on the amount received.
Following is the list of relations which are considered as “relatives” for this
Your spouse Your brother or sister Brother or sister of your spouse Brother or sister of either of your parents Any of your lineal ascendants or descendants Any lineal ascendant or descendant of your spouse Spouse of the persons referred in above points
26 October 2013
Any amount received as Wedding Gift is not taxable from anyone exempt from Tax,
No tax on the amount received through WILL or Inheritance..
Gift Tax on Movable/ Immovable properties
There is a valuation aspect involved in gifting of immovable properties
If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken If the property is gifted for a consideration, then the actual value of the property will be taken
In case of other properties:
If gifted without consideration and fair market value exceeds 50,000, then the fair market value will be taken as the final value If gifted for a consideration and the Fair Market Value (FMV) less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.
CAclubindia
