Along with the new responsibilities, the newlyweds should also be aware of how wedding gifts are treated under the Income Tax Act, 1961.
Tax exempted wedding giftsGifts received by a newlywed couple on their wedding is free from taxation. Irrespective of the value of the present, gifts given to the newlywed by their siblings, cousins, siblings of the spouses, uncle, aunts their spouses or any other linear ascendant, are free from taxation.
Be it jewellery, furniture, property, when gifted by relatives, it won’t be taxed.
Tax exempted for money transferThere is a rising trend of gifting cash as a gift which the couple can put to use as per their wish. And the same, if received from the parents, siblings, relatives or lineal ascendants, then that money is also exempted from any tax treatment.
For instance, if a brother transfers an amount of Rs.10 lakhs in his sisters account as a wedding gift, this transfer of funds is tax exempted.
Taxable wedding giftsIn case the monetary value of wedding gifts given by the non-family member exceeds Rs. 50,000, then the same would come under the ambit of taxation. For instance, if the combined value of gifts received from friends and family friends is Rs. 45,000, it won’t be taxed.
In addition to this, if one gets another Rs.8000, then the whole amount of Rs. 53,000 becomes taxable, which is imposed on the basis of the associated slab rate for “income from other sources”.
Sale of wedding giftsWhile gifts received at the wedding are exempted from tax, the income generated by the sale of these gifts does not enjoy such tax holiday. Say, a daughter receives a flat from her dad as a wedding gift. This transfer or property won’t be taxed.
But if the flat is sold off or lets out for rent, then the capital gains or the rental income earned through the property (wedding gift) will be taxed.
Your wedding is going to be one of the most special events of your life. You would be meticulously looking after all the small and big details of the event. But at the same time, stay aware of the legalities related to the wedding. Registry and gifts tax are few such aspects, which you should be aware of.
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.
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