Gifts above Rs 50,000 taxable from today

Exempted if received on marriage or by inheritance

As per the latest amendment to the Income Tax Act 1961, gifts of all sorts, including immovable property, above Rs 50,000 will become taxable from October 1 this year.

“From tomorrow onwards any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs 50,000 will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF),” a spokesperson of the Central Board of Direct Taxes (CBDT) told Deccan Herald.

“It means if you receive a high value gifts like say Plasma TV, car, expensive mobile handset, immovable property etc. then you will have to pay Income Tax on these gifts. The value of these gifts will be added to your total income and correspondingly Income Tax will be deducted,” the spokesperson said. These types of gift will be considered as income from other sources under clause (vii) of sub-section 2 of section 56 of the IT Act.However, these types of gifts will not be subjected to Income Tax if they are received from relatives on the occasion of marriage of an individual or acquired under a will or by way of inheritance.

Relative are defined in the IT Act as spouse; brother or sister; brother or sister of the spouse; brother or sister of either of the parents; any lineal ascendant or descendant. Gifts received from these relatives will not be subjected to tax.

Earlier cash gifts exceeding Rs 25,000 were subject to tax with effect from April 1, 2004. Later the Act was amended with effect from April 1, 2006, to tax all cash gifts having aggregate value exceeding Rs 50,000. The latest amendments in the IT Act making receipts of gifts in kind were proposed by Finance Minister Pranab Mukherjee in the Finance Bill, 2009, which has been approved by Parliament during the last Budget session.

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