Did you ever think whether you have to pay tax for any gift received from any relative? It is important to learn the rules regarding taxation on gifts received from relatives and other people in India.
If you have the knowledge about the rules relating to gift tax and measures to be taken, you can be tension free.
When tax is imposed on gifts?
According to Section 56(2) of the Income Tax Act, if an amount of money more than Rs. 50,000/- is received as gift by any person or an HUF from anyone, it is chargeable to tax as income under the head”income from other sources”. But there are a few exceptions to this rule.
The following are the exemptions of gift tax rules:
1. Gifts received from relatives – Any amount received from a relative is fully exempted from income tax. As such if a relative gives you gift either as cash or through a cheque, you do not require to pay tax on the amount received. For the purpose of attracting this exemption the relative has to fall under the under mentioned categories.
(b) Brother or sister;
(c) Brother or sister of your spouse;
(d) Brother or sister of your parents;
2. Gifts received at the time of marriage – Any kind of gift received at the time of wedding is not taxable in your hands, whether it is from any relative or not. Even if someone gets Rs. 1 crore as marriage gift it is not taxable.
3. Gift of any amount less than Rs. 50,000/- any sum of money less than Rs. 50,000/- if received as gift by an individual or an HUF from any person is not chargeable to income tax.
4. Anything received by virtue of a will or Inheritance- When any amount of money or any asset is received or by virtue of a will or Inheritance, it is fully exempt from Gift Tax. So if someone gets any property worth Rs 50,00,000/- and any other asset worth Rs 1,00,000 by way of inheritance , he does not require to pay any tax on it.
Registration of gift:
Gift of any cash or cheque does not require to be done through a written deed. Writing a plain paper is normally sufficient. It does not require be stamping and / or registering. But acceptance by the person receiving it is needed.
Gift of any movable property is required to be made on a stamp paper but again no registration is required.