Gift…. All you want to know about taxability!

Who doesn’t like gifts?

But…. Mind You! Tax authorities are waiting to catch you for a share in your gift.

Of course as tax on gifts received.

Did you know? With the amendment in Income Tax Act 1961, CBDT issued a circular saying, "Tax on gifts will be collected from the receiver of gift if the amount received exceeds Rs 50,000. Gift can be in cash or in kind. There is no exemption here.

Now, we can seek protection from this law. The Act says, gifts received from relatives for a specific occasion is exempt from tax irrespective of the amount of gift.

Who are defined as relatives?

They are

1.      Spouse

2.      Siblings

3.      Children

4.      Grandchildren

5.      Parents

6.      Grand Parents

All the above relatives of the spouse are also considered

Similarly, you can seek tax exemptions under Gift Tax for following occasions

1.      Gift under a WILL

2.      Gift due to death

3.      Gift from a local authority

4.      Gift from exempted categories of Public Charitable Trusts or institutions as referred in the Act  (Section 12AA and/or 10(23C))

All receipt other than those received as above will be taxed under the head of

“ Income from other sources” and taxed accordingly.

Keep an eye on these conditions and exemptions the next time you get a gift.