New Delhi2 hours ago
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The last date for filing Income Tax Return (ITR) without fine for the financial year 2023-24 is July 31. While filing this, you need to keep many things in mind. One of these is goods and cash received as gifts. While filing ITR, information about gifts received on Diwali, Birthday, Anniversary or any other occasion also has to be given.
In such a situation, you should take special care of this while filling ITR. If you do not do this, you may get a notice from the Income Tax Department. Chartered Accountant (CA) Anand Jain (Indore) explains the tax applicable on your gift.
Gifts are considered income from other sources
Under the income tax rules, if you have received gifts worth more than Rs 50 thousand in any one financial year, then you will have to pay tax on it. Gifts received on Diwali or any other occasion are considered income from other sources.
This is added to your total income (gross income). That is why this information has to be given while filing Income Tax Return (ITR). Tax has to be paid on this as per your tax slab.
How is gift tax calculated?
Under Section 56(2)(x) of the Income Tax Act, 1961, tax liability arises on gifts received by the taxpayer. Gifts that come under the ambit of tax include:
- Amount of more than Rs 50 thousand received in check or cash.
- Any immovable property like land, building etc., whose stamp duty value is more than Rs 50 thousand.
- Jewellery, shares, paintings or other expensive items worth more than Rs 50 thousand.
- Any property other than immovable property worth more than Rs 50 thousand.
There is no tax on gifts received from relatives
If you receive gifts from your family members with whom you have blood relations, then you do not have to pay any tax on it. You can give or take gifts of any value from your family members. It is not taxable. The gifts falling under this exemption are as follows-
- Gift received from husband or wife.
- Gift received from brother or sister.
- Gift received from husband or wife’s brother or sister.
- Gift received from parents’ brother or sister.
- Gift or property received through inheritance or will.
- A gift received from a close ancestor or descendant of the spouse.
- In case of Hindu Undivided Family, gift received from any member.
- Gifts received from local authorities like Panchayat, Municipality, Municipal Committee and District Board, Cantonment Board.
- Gift received from any fund/foundation/university or other educational institution, hospital or other medical institution, trust or institution referred to in section 10(23C).
- Gift received from a charitable or religious trust registered under section 12A or 12AA.
Wedding gifts are completely tax free
Any gift you receive at your wedding is completely tax free. However, you have to give information about these gifts while filing ITR. Apart from this, you will have to provide proof of marriage like wedding card and wedding photos.
Tax is also levied on gifts received from the employer
Any gift received from your employer up to Rs 5,000 in a financial year is tax free, but if the value of the gift exceeds Rs 5,000, the additional amount will be deducted from your salary.
Do not take cash gift more than Rs 2 lakh
According to Section 269ST, if a person receives an amount of Rs 2 lakh or more in cash, then a penalty will be imposed on that person. That is, in this section the penalty will be imposed on the person receiving the amount in cash and not on the person paying the amount.
So if you are taking an amount of Rs 2 lakh or more as a gift, then take it only through banking channels, like:- A/C Payee cheque, or A/C Payee bank draft, or through electronic clearance system. Transfer from to bank. If the payment is being received through self cheque, it will also be treated as a cash transaction and penalty will be imposed.
