Gift tax


#1

Hi team,

What is gift tax? When should I pay it?


#2

Hi,

Although gift tax at one point was abolished, currently, you need to pay tax if the value of the gifts received exceeds Rs. 50,000 in a financial year. This applies to all kinds of gifts – cash, shares, jewellery, property, and other moveable or immovable assets.

However, these apply to only gifts received from non-relatives. There are also different rules if the gift was received for your wedding. Any amount of money that you might receive in the form of cash or cheque on the occasion of your marriage is fully exempt from tax.

However in 1997, gift tax was abolished. So, both the donor as well as the recipient did not have to pay any tax on the gifts received. Consequently people started misusing the vacuum left behind by scrapping of gift tax. There was a widespread transfer of insincere gifts from non-relatives. In order to fill up this void, Section 56 (2)(v) of Income Tax Act was passed in 2004.

As per Section 56 (2)(v) of the Income Tax Act , any amount exceeding Rs 25,000 obtained by a person or a Hindu Undivided Family (HUF) without any consideration from a non-relative would be taxed. The only cases exempted were the gifts given at the time of marriage, inheritance left behind in a will, or if the payer has died.

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Cheers,
Team BB