Income Tax Implications of Receiving a Gift in India – Lists
India does not have a separate Gift Tax Act. However, the Income Tax Act does cover taxation of gifts under Section 56(2) (vii).
Gifts from Relatives
- No tax liability: You don’t need to pay any tax on gifts received from relatives, irrespective of the amount.
- Definition of relatives: This includes parents, siblings, spouse, children, and other close family members as defined by the Income Tax Act.
Gifts from Non-Relatives
- Taxable if above Rs. 50,000: If you receive a gift from a person who is not a relative, and the total value of such gifts exceeds Rs. 50,000 in a financial year, the excess amount is taxable under the head “Income from Other Sources”.
- Exceptions: Gifts received on the occasion of marriage are exempt from tax, regardless of the amount.
Important points to remember:
- The value of the gift is generally determined by the stamp duty value adopted by the stamp duty authorities.
- Gifts in the form of property or assets may have additional tax implications, such as wealth tax or capital gains tax, depending on the nature of the asset.
- It’s essential to maintain proper records of gifts received, especially those from non-relatives, for potential tax scrutiny.
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