Taxable Gifts

What are Taxable Gifts?

Where an individual or a Hindu undivided family receives, in any previous year, from any person on or after 01-October, 2009,

Taxable Gifts Calculation Taxable Gifts Income Tax In India

  1. any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum;

  2. any immovable property, without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of the property;

  3. any property, other than immovable property, without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property;

  4. any property, other than immovable property, for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration;

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How to Calculate Taxable Gifts?

The computation is as under: -

Any sum Received without Consideration xxx
Less: Any other Expenditure xxx
---
Net Amount Received xxx
Less:
Amount Received from relatives xxx
Amount Received on occasion of Marriage xxx
Amount Received under a will or by way of inheritance xxx
Amount Received in contemplation of death of the payer xxx
Amount Received from any local authority as defined in section 10(20) xxx
Amount Received from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in section 10(23C) xxx
Amount Received from any Trust or Institution registered u/s 12AA xxx
---
xxx
---
Taxable Gifts (if the aggregate value is more than Rs50,000) xxx
---

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Who is Relative as per Income Tax Act?

A Relative of an Individual as per Income Tax Act means -

  1. Spouse of the Individual

  2. Brother or Sister of the Individual

  3. Brother or Sister of the Spouse of the Individual

  4. Brother or Sister of either of the Parents of the Individual

  5. Any Lineal Ascendant or Descendant of the Individual

  6. Any Lineal Ascendant or Descendant of the Spouse of the Individual

  7. Spouse of the Persons referred to in (2) to (7)

In case of a Hindu undivided family (HUF), any member of the HUF will be treated as Relative.

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Example Calculation

Let's consider Mr.Lucky is receiving the following amounts without consideration:

  1. Rs2,50,000 from the Father of the spouse at the time of marriage on 01.09.2011. Besides, in the marriage he received Rs50,000 worth of gift articles and Rs45,000 from relatives and Rs30,000 from others as cash and gift cheques as marriage presents.

  2. Rs75,000 from his spouse on 15.10.2011.

  3. Rs1,50,000 from his friend on 04.07.2011.

  4. Rs1,20,000 from his employer on 04.03.2012.

Marriage Gifts (Not Taxable) Nil
Gift from Spouse (Not Taxable) Nil
Gift from Friend (Taxable) 1,50,000
Gift from Employer (Taxable as Salary) Nil
--------
Taxable Gifts (since greater than Rs50,000) 1,50,000

Taxable Gifts FAQ

Residential Flat to Married Daughter

We have a residential Flat. We want to gift the house to our married daughter. Please let me know about the documents which would be required to be executed?.

Gift of any kind to relative is tax free. So you can give the flat as gift to your daughter. There is no tax implication. You can gift the house using a Gift Deed. The same can be registered.

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Residential Land from My Wife

My wife gifts Residential land to me. How much Gift Tax I have to pay?

Tax on Gifts has been abolished in the hands of the Donor. However, the Gift is now being charged as income in the hands of the receiver as his income under the Income-tax Act.

However, any gift received is not taxable, if the transfer is between you and your close/blood relative (refer list given above for close/blood relatives).

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Ford Figo from My Father-in-Law

My father-in-law is gifting a Ford car to me. He asked me to register it in my name. He will pay the full amount.

Is its taxable in India?

Gifts from Relatives are not taxable in India.

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Gift from Friend from US

I am an Indian Resident. One of my friends wants to give 50,000 USD for me as Gift.

I will be using it to start a business in India. Is the amount taxable?

Any gift (Money/Immovable Property/any property) received from a non relative above Rs50,000 in aggregate is taxable u/s 56.

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Marriage Gifts

I received Rs1,50,000 (cash) as gift on my marriage. Apart from that I received Gold coins of 65 gms. Do I need to pay Income tax? My friend says I have to show this amount in tax return? Is it true? Please explain.

Any gifts you receive on your marriage are Not Taxable. As your friend suggests, it's better to show this amount in Income Tax Return for future reference.

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Gift to Wife

Is it possible for me to save tax by gifting portion of my annual income to my spouse?

No. You have to pay tax on your annual Income.

But your spouse need not pay tax on the amount received from you as gift.

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Retirement Benefits to my Wife

I got my retirement benefits on 27-Feb-2011. I want to transfer 70% of the amount to my wife. My wife plans to invest the money in FD. Do we need to pay any tax?

You can transfer any amount to your wife from your Retirement benefits. It is not taxable.

If your wife invests the money in FD and earns Interest Income that would be taxable in your hands and not in your spouse's hand.

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Fund transfer from Aboard

I am an NRI. I recently got married. My wife lives in India. How much money I can transfer to her account?

Do I need to pay tax on any income earned by my wife using that amount?

1. Any amount you gift to your wife is not taxable. There is no ceiling limit for exemption under Income-tax Act. There is also no limit under the FEMA for receipt of Gift. However, check for the US Law on the maximum amount transferable outside US.

2. Yes. If she earns income from the amount you gifted her, it will be taxed. This will have to be clubbed by you in your return as your income for Income-tax liability in India.

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