It is widely common for people to receive gifts from friends and relatives. But, tax levied on that Gifts worries almost all of us. If you receive high value gifts, you should too know each fact regarding Gift Tax like what it is? When Tax is to be paid and when it is exempt? And many more things.
The provision regarding tax on Gifts received is applicable only for individuals and Hindu Undivided Families (HUFs). The gift tax is levied on both cash gifts (that is, cash / cheque / drafts) and gifts in kind (like property, shares, jewellery, work of art, etc).
Any gift received in cash or kind exceeding Rs 50,000 or purchase of movable or immovable property for inadequate payment is taxed in the hands of recipient as â€œincome from other sourcesâ€ and is taxed as per the income tax slabs applicable to you (recipient).
But, Gift received from your relatives does not attract Gift Tax irrespective of its value, it is fully exempt. Here, â€œrelativeâ€ means: Your spouse, Your brother or sister, Brother or sister of your spouse, Brother or sister of either of your parents, Any of your lineal ascendants or descendants, Any lineal ascendant or descendant of your spouse and Spouse of the persons referred to above.
In addition to above, if you receive a gift on any of the following occasions, that gift will be tax free in your hands, on occasion of the marriage of the individual, Under a will or by way of inheritance, in contemplation of death of the payer, any local authority, trust or university etc, from any foundation / university / other educational institution / hospital, and from any trust / institution (registered as a public charitable trust / institution under section 12AA).