Income Tax On Gifts: Know When Your Gift is Tax-Free

Any sum of money given in cash or cheque, immovable property like land or building or any movable property like shares and gold are considered as gifts. As per the IT Act 1961 , the receiver is taxed according to the income slab.

There are certain exceptions to the gift income tax . Following are the instances where gifts are not taxable.

• If the sum of the monetary gift is less than Rs. 50,000.
• If you receive a gift from a specified relative.
• Gifts received during the occasion of marriage and those inherited from a will.
• Gift received in contemplation or anticipation of the death of the donor.
• Property received from a local authority.
• Property received from a trust registered under section 12AA.

The scope of relatives depends on whether the receiver is an Indian Resident, Hindu Undivided Family or NRI. Let's examine all three.

For all Indian resident, the list of relatives include;

• Your spouse and spouse's siblings.
• Your lineal ascendants or descendants such as parents, grandparents, children, grandchildren, etc., and their spouses.
• Your siblings, spouses of your siblings, siblings of your mother or father.
• Your spouse's lineal ascendants and descendants.

In case the donor or donee is a member of a HUF , a relative could include any member of the particular HUF.

In case the receiver of the gift is an NRI or PIO (Person of Indian Origin), the scope of relatives will be as defined under the FEMA (Foreign Exchange Management Act) regulations, which includes;

• Your spouse
• Your father and mother
• Your son/daughter and their spouses
• Your siblings

In case you are filing ITR, you need to mention the gits received, and it will be mentioned under the head "Income from other sources". Whether you are liable to pay tax on the gifts or not would depend on whether the gift meets the exemption criteria or not.

If the gift sum lies below the threshold (50,000), in that case, it is not mandatory to mention them in your ITR. In cases other than this, it is advised that you act as a responsible citizen and file your ITR without any omissions and pay your taxes punctually.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.