Income Tax on Gift Received

Is Income Tax levied on Gifts Received by a Person?

1.Tax Free Gifts:

a. Gifts From Relatives:

Income tax on Gift (Thetaxinfo.com)

  • Gifts of any value in Cash or Kind from Relatives are tax free
    • List of People Considered as Relative for this purpose:
      • 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 (descendant of your spouse? yes :D)
      • Spouses of the all the persons referred in above points

b. Gift Received On Marriage Occasion:

  • Gifts from Relatives as well as Non Relatives on Marriage occasion (Not Anniversaries) of the Assessee is Tax Free.
    Explanation: Even if the gift was received on any other day but which was given for the proximate cause of Marriage occasion, then such Gift will be Tax Free (Ref: Neelambal Ramaswamy (Madras))

c. Gift Received by way of Will or Inheritance

  • Gift Received by way of Will/Inheritance, Irrespective of the amount or form either in cash or kind, irrespective whether it is received from Relative or Non Relative, No Tax is Levied on such Gift Received.

2. Gifts Which Are Taxed:

a. Gifts from Non Relatives on any day other than on marriage occasion, if the total Gifts received in any form (Cash or Kind) in the year exceeds Rs 50,000/– (even by Rs. 1) then whole (i.e, Rs 50,001) such Gift Amount will be Taxable.

b. Any property received for a consideration where FMV or Stamp Value of such property when compared to consideration is more than Rs. 50,000, then such excess amount shall be taxable as GIFT.

 

Illustrations for your Understanding:

  1. If you have received Gift in Cash or Kind of Rs. 50,00,000 from your Mom or Dad or any other relative then such gift is tax free.
  2. If you have received Gift of Rs. 7,00,000/– from your friend on your Marriage then such Amount received is tax free since it is received on your Marriage.
  3. If you have received the Gift from the same Friend (a Non-Relative) say Rs. 51000/- on the next day (the day other than your marriage occasion) then such Gift is taxable for whole Rs 51,000/- in the given case if you had received Rs 49,999/- then whole amount would be Tax Free.
  4. If you have Received a Property worth Rs. 25,00,000/- from a friend in the form of Will, the whole amount is Tax Free since it is received in the form of Will

 

We have made a easy to understand table on the same:

W.e.f. Recipient Nature of Reciept Criteria Taxability as Income
1-Apr-06 Ind/Huf* Any sum of money without consideration > 50,000 whole amount
Ind/Huf* Any sum of money without consideration > 50,000 whole amount
Ind/Huf* Immovable properties without consideration > 50,000 whole of stamp value
Ind/Huf* other properties without consideration > 50,000 whole of FMV
Ind/Huf* other properties FMV less consideration > 50,000 such excess amount
1-Jun-10 Co** property being shares without consideration > 50,000 whole of FMV
Co** property being shares FMV less consideration > 50,000 such excess amount
1-Apr-12 Co** Issue of Share Capital at Premium *** FMV less consideration such excess amount
1-Apr-13 Ind/Huf* Immovable properties Stamp value less consideration >50,000 such excess amount
* Exempted, If received from relatives, under will/inheritance, on marriage, on death, local auth, u/s 10(23C) or (members of huf from huf wef 01.10.2009);**other than companies in which public are substantially interested***onus of proof of source in the hand of resident share holder lies with companyFMV – Fair Market Value

 

(Last updated on 28/01/2015)

Dilip Kumar

+Dilip Kumar (Author and Editor of The Tax Info) is a Chartered Accountant from Hyderabad, Loves Blogging on Tax related matter.

You can Subscribe for his updates on Facebook & Google+

 

2 thoughts on “Income Tax on Gift Received

  • July 6, 2013 at 2:05 pm
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    Dear Dilip my friend doing individual proprietor business he deducted tds and paid quartly (april 13 to june 2013)
    but some one told me will pay tds monthly and efill quarly it is correct .kindly explain about tds

    Reply

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