Taxes on Diwali Gifts received

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You might become liable to pay tax as per the Indian Income Tax Act, under the head “Income From Other Sources” as per the applicable slab rate. If you receive gifts in the following circumstances:

If you receive gifts from non-relatives in a financial year whose aggregate sum exceeds Rs. 50,000, the total amount will be taxable.
In the case of gifts from an employer, gifts up to Rs. 5,000 in a financial year are exempt; if the amount exceeds Rs. 5,000, then the whole amount received will be taxable.
However, individuals receiving gifts from specified relatives are entirely exempt from tax, irrespective of the value.
In legal language, the giver is called the donor, and the person receiving the gift is called the donee.

From the point of view of tax on Diwali gifts or the gifts on any other occasion, the items that are classified as gifts as per the Income Tax Act are as follows:

Receiving money through cash, draft, cheque, or bank transfer (referred to as “sum of money”).
Getting immovable property like land, buildings, or residential/commercial property.
Receiving movable property such as jewellery, shares, bonds, paintings, sculptures, and so on.
Taxability of Gifts from Relatives
When you think about tax on New Year gifts in India, the first thing that strikes is the gift received has to be from a non-relative. If it is from a relative, the entire amount of the gift is exempted from tax. But who are considered as relatives?

Well, relative in case of analysing tax implications on gifts includes the following people:
For individuals -

Prents of the individual
Spouse of the person
Sister or brother of the person
Sister or brother of the spouse of that person
Any descendant or lineal ascendant of the individual
Any descendant or lineal ascendant of the individual's spouse.
The spouse of the individual referred to above

For HUF (Hindu Undivided Family) -

Any member of the HUF


Cars, bikes, cycles, mobiles, or other electronic gadgets are not considered movable property under section 56(2)(X). Therefore, receipt of a car, bike or cycle as a gift from a non-relative shall not be taxable under the head of “Income from other source”
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#car #bike #electronicgoods #cakarannagpal #taxongift #incometax #incometaxupdate