Exchanging presents is a key a part of festivals in India. From money presents to gold and silver cash, all represent gifting choices throughout Dussehra, Dhanteras and Diwali.
Nevertheless, many aren’t conscious that presents can appeal to tax. Underneath Part 56(2) of the Revenue Tax Act, presents acquired through the yr are taxed as per the slab charge beneath ‘earnings from different sources’.
Tax guidelines for gifting differs as per the character of the present and from whom it’s acquired.
Which presents are taxed?
You’re required to pay taxes on presents if the mixture worth of all presents acquired throughout a yr exceeds ₹50,000. If the mixture quantity is ₹50,000 or much less, it’s tax-free, nonetheless, if the full worth exceeds the brink even by a rupee, all the quantity is taxed. As an example, when you’ve got acquired presents price ₹51,000, all the sum shall be taxed as per the relevant charge. Within the case of money, any sum acquired with out consideration is handled as a present. With out consideration implies that the merchandise is transferred purely as a present or donation, with no receipt or promise of fee, service or good of worth in alternate of the mentioned merchandise. For immovable property, when it’s acquired with out consideration, its stamp obligation is chargeable to tax, whereas when the property is transferred with insufficient consideration, stamp obligation worth exceeding consideration is taxed.
Within the case of jewelry and shares, the honest market worth of such objects is chargeable to tax.
Exemption in tax
You may get an exemption on tax on presents relying on whom are you receiving it from. In keeping with the I-T Act, presents acquired from kin are exempt from tax.
Donee’s partner, brother or sister, brother or sister of the partner, brother or sister of both of the mother and father or parents-in-law, any lineal ascendant or descendent, any lineal ascendant or descendent of the partner, partner of the individuals referred above all qualify as kin as per the I-T Act.
Items acquired from any of those individuals, regardless of the character and worth of the present and the event when the presents are transferred, are exempt from tax.
Since associates aren’t thought-about kin, presents from them are taxed. Nevertheless, presents given on the event of wedding ceremony or transferred beneath a Will or inheritance are exempt from tax when acquired from any individual and never simply kin.
Supply: Live Mint