Discover Tax-Free Gift Options

Income Tax Rules on Gifts: Whether it is Diwali or Holi festival or occasions like birthday, engagement, wedding at home, the process of giving and taking gifts continues. But do you know that there are some tax rules attached to the gifts you are getting. Who has given you the gift and how much it is worth, depends on that which gift will come under the purview of tax and which will remain out of the purview. Most people are not aware of the income tax rules applicable on gifts. Let us tell you.

These gifts are not taxable

If your close relatives and close relatives give you gifts, then they are not taxable. Husband-wife, brother-sister, brother or sister of husband/wife i.e. sister-in-law, sister-in-law, brother-in-law, brother-in-law, brother-in-law, mother/father’s brother or sister i.e. aunt, maternal uncle, paternal uncle, grandparents, grandparents of husband/wife, son or daughter and husband or wife of brother/sister are kept in the list of close relatives. If they give you a gift, it does not come under the purview of tax. Even if its value is more than 50 thousand.

Understand this rule well

• There is no tax on gift exchange between husband and wife because the income from gift exchange comes under the purview of income clubbing.
• Property, shares, bonds, car etc. are tax free if received from close relatives, but if received from friends or acquaintances, then tax is levied on them.
• Gift received on marriage is completely tax free, while gift received from employer comes under the purview of tax.
• If you receive a gift of up to 50 thousand rupees in a year from friends or acquaintances, then it is kept tax free, if the value is more than 50 thousand, then tax has to be paid.
• There is no tax liability on property inherited from close relatives, but tax has to be paid on selling that property.
• There is no tax on property inherited through a will, but tax has to be paid on selling this property.

Conclusion

The income tax rules surrounding gifts is essential for individuals to avoid unexpected tax liabilities. While certain gifts, such as those received from close family members or within specified limits, may be tax-free, others—particularly those from non-relatives or gifts above prescribed thresholds—can attract tax. It’s crucial to be aware of the specific exemptions and limits set by tax authorities, as well as the documentation requirements for gifts. By staying informed and following the rules, individuals can make sure they’re in compliance and avoid unnecessary tax burdens when receiving or giving gifts, including popular options like gift baskets.

Editor Emedianama

See author's posts