Income Tax on Gifts from NRIs and Relatives in India

by Guest Blogger on November 21, 2012

in Tax

This article is written by Aashish Ramchand, a Chartered Accountant by profession. Aashish is the co-founder of makemyreturns.com. He also has completed his CFA Level I (American) and is very passionate about writing articles on taxes and tax advisory. He can be reached at connect@makemyreturns.com

Generally, gifts are not regarded as Income chargeable to tax. However by virtue of Section 56(2) any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under other sources subject to exclusions as below:

  1. Receipts on occasion of marriage of the individual
  2. Receipts under a will or inheritance
  3. Receipts received from a relative.

Since 1/10/2009, Section 56(2) has been amended and the scope of gifts and will include even immovable properties or any other property besides sums of money under its ambit.

Gifts that are not taxable at all are those that are received from relatives. Relatives are defined by the following relationships of the individual:

  1. Parents
  2. Parents siblings and their spouse
  3. Siblings
  4. Spouse of siblings
  5. Daughter and son
  6. Spouse of daughter and son
  7. Spouse
  8. Spouse’s parents
  9. Spouse’s siblings and their respective spouse.

Even NRIs are covered as long as they fall in the category of relatives. Therefore an individual Indian resident can receive a tax free gift from an NRI as long as he/she is that individuals relative. Any amount can be received as a gift from a relative. Also the purpose for which the gift is received from a relative is inconsequential as it is completely tax free. Thus a gift received can be used for any purpose ranging from purchasing shares to buying property to even simply keeping it with the bank.

Note on gifting on immovable properties

There is a valuation aspect involved in gifting of immovable properties:-

  1. If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
  2. If the property is gifted for a consideration, then the actual value of the property will be taken

In case of other properties:

  1. If gifted without consideration and fair market value exceeds 50000, then the fair market value will be taken as the final value
  2. If gifted for a consideration and the FMV less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.

As mentioned earlier NRIs can also give gifts to resident Indians. Therefore, It is important to understand the meaning of an NRI as per the IT act.

An individual will be treated as a non resident in India in any previous year if he fulfils any of the following two conditions:

  1. he/she is NOT in India in that year for period or periods amounting in all to 182 days or more, or
  2. Having within the four years preceding that year NOT been in India for a period or periods amounting in all to 365 days or more, and has NOT been in India for 60 days or more in that year.
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{ 165 comments… read them below or add one }

Manikaran Singal November 22, 2012 at 10:58 am

Just to add , Gift tax provisions has to be read in conjunction with the clubbing provisions which are detailed u/s 60-64 of income tax act 1961. These sections deal with the cases where tax payers make an attempt to reduce the tax liability by transferring / gifting their assets in favour of family members or by arranging their sources of income in such a manner that tax incidence falls on others, but in actual the benefit of income enjoyed by them. one needs a proper tax planning at every life stage by understanding tax provisions simultaneously. I’ve written a series of articles on tax planning at different life stages, hope it benefit the readers http://goodmoneying.com/tax-planning-2/tax-planning-tips-for-married-couple-with-kids.
Even one article on FPGI by me also throws light on this issue http://www.fpgindia.org/2012/11/spreading-the-income-golden-rule-to-save-tax.html

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Manshu November 22, 2012 at 9:34 pm

Thanks for the comments and links Mani. I might make a small post out of this referring to your articles.

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sameer November 22, 2012 at 8:36 pm

thanks for the article…especially the list of relatives…

1) If My dad gifts me a certain amount, then he get tax emeption on the gift amount ??

2) Whts the upper limit for cash gifts? do we need to preserve the gift envelopes )R need to disclose the person who has gifted us in case the taxman asks for??

3) Can my first cousin be treated as a blood relative for Gift ( son of my dad’s real elder brother)

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Manshu November 22, 2012 at 9:31 pm

Sameer, here are the answers to the best of my knowledge.

1. When you get a certain gift, that’s tax free for you but doesn’t make it tax free for the person who gifted it to you. So for your dad the money is still taxable if he hasn’t already paid tax on that.

2. Rs. 50,000 when it’s not from one of the relatives listed in the post, and there’s no upper limit as far as I understand when the gift is from a relative.

3. No.

Could Mani or Aashish please look at my responses and verify them as well? Thanks!

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Manikaran Singal November 23, 2012 at 11:45 am

@ Sameer
1. Whatever you recieve from your dad will be tax free in your hand . There’s no question of recieving any tax exemption by your father. So manshu has replied it correctly.

2. Manshu is right here as well. As far as documentation is concerned, one may take a letter from the person giving gift stating the amount and reason (which can be love and affection). This letter should also state the Pan no. of the concerned giver.

3.No. but the gift given by your dad’s real elder brother will be tax free.

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sameer November 23, 2012 at 8:52 pm

Thanks Manshu & Manikaran for ur replies…

When one gets shares as gift or via a WILL, what are its taxation implications?? And does the beneficiary need to hold it for 1 year to avail of long term capital gain tax exemption in case he wishes to sell any??

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Manshu November 23, 2012 at 11:34 pm

I’m not sure how the question on getting shares as gift is different from what you have already asked? Can you elaborate that please?

I don’t know how the capital gains is calculated in this case. Sorry.

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Manikaran Singal November 24, 2012 at 11:29 am

Sameer in case of shares recieved through WILL or inheritance the actual purchase date will be counted to calculate the Capital gain .

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Manikaran Singal November 24, 2012 at 11:30 am

also there’s no Inheritance tax as of now in India. But PC is going to have discussion in this area too.

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Manshu November 24, 2012 at 9:58 pm

Thanks Mani!

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Manshu November 23, 2012 at 11:35 pm

Thanks Mani – quite an interesting point about the dad’s elder brother, I didn’t know that.

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Raja November 23, 2012 at 3:23 pm

Ah there it is! I was referring to this in my earlier comment on the NRI investment into direct equities.
So, tying up the 2 posts, a nri can gift to his parents and invest in the market through them, and transfer it back to his name once he get’s back to India.
of course the taxation on the gains from investing needs to be taken care by parents.

Regards

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Manshu November 23, 2012 at 11:34 pm

You’re exactly right Raja, and this post was actually triggered by your comment only!

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Raja November 24, 2012 at 7:48 am

Super! Now i don’t need to visit a tax expert :) Thanks !

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Manshu November 24, 2012 at 10:02 pm

Not for this at least :-)

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Income Tax December 29, 2012 at 12:55 pm

Thanks for the very useful ariticle especially list of people from whom one can receive gifts tax free. One question, regarding gifting of immovable properties, you have said that “If the property is gifted for a consideration, then the actual value of the property will be taken” can you please elaborate more on this? when you say property gifted without any consideration and gifted for a consideration what exactly does it mean??

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Manshu December 30, 2012 at 7:20 pm

Gifted for a consideration or the word ‘consideration’ means that you are getting paid something in cash or kind.

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TS Maheswaran February 17, 2013 at 9:21 pm

Sir,
Can I gift Rs.2 lacs only to my son who is an NRI in US and transfer to his US account ? Are there any tax implications?? Thanks.

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Manshu February 17, 2013 at 10:35 pm

Yes, you can transfer the money to his NRO or NRE account, and then he can withdraw from there based on the conditions of the account itself.

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Raj March 10, 2013 at 10:18 pm

Hi Manshu,

If you are in India, you can only transfer funds to NRO account. Transferring funds to NRE account from India is not possible. It can only be done from accounts outside of India.

Regards,
Veeresh

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Manshu March 11, 2013 at 5:23 pm

Thank you for correcting me Raj. I wasn’t aware of this and thought you can use the NRE account to transfer funds from India as well. Sorry for the error, and thanks for correcting me.

Do you have any suggestions on how this could be achieved?

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Nisha February 19, 2013 at 11:59 pm

Hi, Suppose I win a contest online which offers a gadget worth Rs. 30,000. Am I liable to pay gift tax? It’s within the limits but apparently the people are asking me to pay tax before sending the prize. Should I pay and then claim for a refund? Seems unneccessary but what if they push for it?

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Manshu February 20, 2013 at 2:09 am

As far as I know, anything over Rs. 10,000 is taxable and you have to pay 30% plus surcharge on it. Is that the amount they are asking you to pay?

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Nisha February 20, 2013 at 9:42 am

They have not given details. But have asked me to pay Rs 7500 to the Post ofice or a National Bank. First I thought it was all fraud…but now as I’m reading more, it seems fair.
When I checked online, gift tax is for 50k and above. Don’t know which category this will come under though.
Thanks for your help.

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Manshu February 20, 2013 at 5:46 pm

This doesn’t fall under gift tax. It falls under Section 194B of IT Act which deals with lottery prize money and winnings etc. You can look that up if you need more info.

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Swati February 20, 2013 at 6:31 pm

Like Nisha I too have won the same contest. I don’t think it can be termed as lottery as It was not a lucky draw but based on writing skill and our articles were selected from many of the enteried submitted. I conclude this after reading last 2 paragrafhs here :http://www.caclubindia.com/articles/section-194b-7636.asp#.USTGUx36Wjk.
Also they particularly asked us to pay “Gift Tax”. Is gift tax and tax on Gambling / Lottery not different.
Can you please tell me more on this.

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Manshu February 20, 2013 at 8:41 pm

Hmm, the act governing these two are different but after reading that link you sent it feels like there is more complication when the prize is based on some skill or something so I’m sorry but I can’t help you more on this.

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ANIL SHAH February 20, 2013 at 11:10 pm

can i gift some amount from my salary to my son ‘s bank a/c ( 20 yr old , studying in engineering, non-earning) and have a FD in his name. will interest on FD will be tax free. how much amount i can transfer each year. is there any limit. can i have demat a/c account in his name and invest in equities. will clubbing provision apply here.

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Manikaran Singal March 18, 2013 at 9:43 pm

Whatever interest earned on FD in your son’s name will be treated as income of your son and not yours. If your Son doesn’t fall in any income tax bracket than it will not be taxed. There’s no limit on gift from father to son or vice versa.
Even if you open d’mat account in your son’s name and earn some income out of investment, no income will be clubbed in your income

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Anuj February 27, 2013 at 6:00 pm

Hi,
My father had gifted me Rs.1,00,000. I want to invest them under various heads
viz.( equities, PPF, LIC etc.)
I want to know:
1] Do my father taxable income will come down by the gifted amount(in this case Rs. 1,00,000)?
2] Will the earnings from the investment be clubbed under my name or my Father?

P.S. Me & my father both file IT returns and fall under different tax slabs.

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Manshu March 4, 2013 at 5:14 am

1) He cannot reduce his taxable income by gifting the money to you.
2) When you earn returns by investing this money, it will be charged to you, not him.

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siddharth May 29, 2013 at 5:45 pm

If in this case, son invest gift amount in new property for his own , how father can get tax exemption on that amount (is there any way) ??

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Rupam February 28, 2013 at 2:20 pm

hi,
I also won online, probably tha same thing as Nisha. they are asking for Rs 7500 as gift tax. Is it genuine?

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Manshu March 4, 2013 at 5:08 am

There is a tax so that part is legit, but whether the company giving you the gift is or not I don’t know.

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k p vaishnav March 4, 2013 at 11:28 pm

My nri son will gift me his flat and I would sell it and remit the amount in dollars to him in usa to pay for house bought thro libralised remittance scheme Introduced by rbi.
Please advice if I am to pay cap gain tax. This course is thought to avoid tax and financial burden if. He sells and transfers money. We solicit your advice’which will very
uch appreciated.

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Manshu March 5, 2013 at 6:49 am

Yes, when you sell the property there will be capital gains, and you are required to pay taxes on them.

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Praveen March 5, 2013 at 10:31 pm

Hi,

If I gift money to my wife and she uses it in her business and makes money, will I have to pay tax on gains/returns she makes from the investment? Basically do I need to club profit generated from investment made on money gifted to my wife with my income for tax purposes?

Regards

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Manikaran Singal March 18, 2013 at 9:37 pm

Yes praveen. The income generated out of your gift toyour wife will be clubbed in your income and will be taxed as per your IT slabs. So if you want to support her in her business, than rather giving gift, give money on loan.

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NILESH March 6, 2013 at 10:44 am

IF NRI SON GIFT CASH TO HIS FATHER WITH NOTARISED GIFT DEED.

WILL THAT INFLOW IS TAXABLE IN HANDS OF FATHER. ?

I PRESUME THE TAX IN STATES IS
PAID BY SON ON SUCH AMT TRF AS THAT IS HIS INCOME.

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Manshu March 6, 2013 at 4:50 pm

No, it is not taxable in the hands of the father.

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suresh March 7, 2013 at 11:57 am

can a partnership firm consisting of son, husband and daughter -in- law ,
gift a land in its name to a woman (who is the wife and mother of the above said persons).

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Manshu March 7, 2013 at 6:10 pm

Sorry, don’t know about this.

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Manikaran Singal March 18, 2013 at 9:33 pm

I guess yes. A firm can gift but reciever has to pay gift tax.

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kanika March 8, 2013 at 7:17 pm

sir i am 28years old girl.2 years back i had shifted my city n left my job bcz my boyfriend told me to leave my job.i m not working since then.he promised me to marry.but didnt fullfilled it.2 years now he is saying he is going to marry a girl of his family choice.and now my family is also against me.he told me that he will give me 50 lakh indian ruppees to compensate what he did to me.i m middle of nowhere.my question to is what is the proper way to take money from him.so that he will not create any problem to me regarding it in future.plz guide me and what will be the tax i have to pay for it.beacuse he is not my husband or any relative.thanks

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Noname April 14, 2013 at 9:17 am

There will be a tax liability in this case, as per the tax slabs.. There is no exemtion of any sort.
However, in case, you take money in name of someone who is a senior citizen, the tax liability may slightly reduce..

hope that helps.

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ashim March 9, 2013 at 4:38 pm

My grandfather’s brother’s wife and daughter wishes to gift an immoveable property valued (as per property registration rules) to be 1.50 crores. Will I incur Gift Tax liability on this property?

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Manshu March 12, 2013 at 10:09 pm

The relationship you describe above doesn’t fall under the relatives mentioned here so I do believe this will be charged to tax.

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C A BHARAT A DOSHI March 10, 2013 at 11:21 am

ONE OF MY CLIENT WANTS TO REMIT RS.50000/- TO RELATIVE IN US . MY QUESTION IS
UPTO WHAT LIMIT ONE CAN REMIT THE AMOUNT TO US
WHETHER ON ANY TRANSFER OF FUND WHETHER WE HAVE TO ISSUE CERTIFICATE IN
FORM 15CB

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Jay Bhatt March 13, 2013 at 5:14 pm

Hi – My building is being re-developed and our current apartment is in the name of my mother. I’d like to buy a bigger apartment in the new building for which I plan to take a loan. However, as the flat is in my mothers name – I won’t be able to take a loan directly. The general opinion is that she gifts me a part of the house (say 50%) and then I can apply for a loan on that 50% which can be used to buy a larger accommodation. My questions are: 1) Would I have to pay any tax on this gift as the estimated value will be around 70lacs. If yes, how much? 2) I just got married 2 months back – if she gifts this to me as a part of the marriage – would that still be taxable or is that exempt? Any other tips/suggestions would be very helpful. Thanks!

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Manikaran Singal March 18, 2013 at 9:28 pm

The answers are hereunder:
1. You don’t have to pay tax on the gift. But yes, you may have to bear some cost in transferring the partial ownership in your name.

2. Mother can gift any amount , in any shape to her son anytime with no tax liability on either part.

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Amit March 13, 2013 at 6:30 pm

First of all thanks for this useful article. My father in law wants to gift two properties to my self and my wife. Will I have to pay anytax? The total value of both the properties is around 55-60 lakhs (going by market rates). The properties were acquired by my father in law only 2 years ago. My wife and I am are NRIs and my father in law is a farmer so he doesn’t pay any income tax.

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Manikaran Singal March 18, 2013 at 9:30 pm

There would not be any tax on the gift from father in law to son in law.and father to daughter.

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nalin goel March 18, 2013 at 1:45 am

my mother thru her savings in household expense money given by my father since their marriage in 1942 had a habit of converting it into gold and called it `Stree Dhan’.though a wealth tax assessee somehow this stree dhan never got into WT returns.6months prior to her death she made a gifdeed of that gold in my childs name for his wife etc.Is it legal ?If not what do we do?We do not have access to any records

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Choudary March 19, 2013 at 9:19 pm

Hi there,
I have a question about a property that my mother wants to gift me. It’s my parents current residence in Vijayawada, Andhra Pradesh. It needs to be reconstructed and its my my duty to put money towards construction cost. I am planning to take bank loan but I can not get it directly as its not on my name. So my mother planned to gift me this property. This property is worth about Rs. 40lakhs.
My question is:
How much percent if tax I have to pay?
I am an NRI yet Indian citizen. How does my status effect my current situation?

Please help me.
Currently I am in India so I would like to complete all the formalities (transferring, taking bank loan, planning and start work) before I leave in April.

Thank you for your time and suggestions in advance.

Kind regards
Choudary

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Manikaran Singal March 25, 2013 at 5:35 pm

Chaudhary, you don’t need to pay any tax on the gift recieved from your mother and neither your tax status (NRI or resident individual) has anything to do with it.
But yes, you may have to bear expenses like some stamp duty or registration/transfer charges on transferring the ownership of the asset in your name.

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jay March 20, 2013 at 5:02 pm

sir can u suggest a gift format for gifting a shares from father to son which can be used in case required to produce before govt authority? Further whether is there any stamp duty payable on such gift? whether clubbing provision would attract in case of short term cap gain?

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Manshu March 26, 2013 at 6:18 am

I found this format for a gift deed. This may be useful for you. http://www.caclubindia.com/share_files/format-of-gift-deed-1776.asp#.UVDwSBdQG8A

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babulal jain March 22, 2013 at 9:18 pm

can i gift 10,00,000=00 to my nephew
what is my tax libility and what is my nephew libility ?

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Manshu March 26, 2013 at 6:10 am

You can give a gift to him but it won’t be tax free. It will be added to his income and then will be taxed accordingly. You will not have to pay additional tax for gift but you will have to pay whatever tax is applicable on how you earned this income.

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Manikaran Singal March 29, 2013 at 9:11 pm

Babulal…whatever your nephew (Major) recieves from you as a gift will be tax free in his hand as you come under the definition of relative (siblings of either of parent) for your nephew.

@manshu…had this been other way round..i.e where uncle recieve gift from nephew than uncle will have to pay gift tax.

Let me share one link from tax worry, where the author has described the relations in detail
http://taxworry.com/gift-meaning-relative-huf-exempt/

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Manshu March 30, 2013 at 7:34 am

I am sorry for my error and thank you for correcting me Mani.

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SHAMIM AHMED ANSARI March 26, 2013 at 1:05 am

I want to know about gift tax ? Gifts that are not taxable at all are those that are received from relatives. Relatives are defined by the following relationships of the individual:

1. Parents
2. Parents siblings and their spouse
3. Siblings
4. Spouse of siblings
5. Daughter and son
6. Spouse of daughter and son
7. Spouse
8. Spouse’s parents
9. Spouse‘s siblings and their respective spouse.

from Each person Can taken gift exeeding Rs.50000/-from relatives.[ 1 financial Year ] ?

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Manshu March 26, 2013 at 6:03 am

Yes, as mentioned in the article you can get gifts from relative without an upper limit, and not have to pay any tax on it.

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Vinod April 6, 2013 at 3:57 pm

Hi an NRI friend of mine wishes to transfer the property he had bought prior to settling overseas to his mother who is a senior citizen so that she stays comfortably. He is not likely to return to India and has taken UK citizenship. In this case my understanding is as follows :
1 – He has to execute a gift deed transferring this asset to his mother
2 – The mother has to pay stamp duty as per market value
3 – I also understand there will not be any tax implication either to him or his mother

Please correct if wrong

Kindly enlighten me as to what happens in case the mother decides she does not want the responsibility of maintaining another asset and decides to sell the property. What will be the tax implications in this regard?

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Manikaran Singal April 8, 2013 at 3:06 pm

Vinod, you have understood in the right way.
Regarding your second point of mother selling the property…she will have to pay the capital gain tax on the gains made.

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Manshu April 9, 2013 at 5:39 am

Thank you for answering that Mani!

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Sharmeen April 9, 2013 at 3:19 pm

My brother is an NRI and wishing to gift me an amount of Rs.30 lacs.
Will there be any tax implications on both of us?
Can I invest the entire amount in shares?

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Manshu April 14, 2013 at 7:59 pm

It won’t fall under gift tax, and you are free to invest the money in shares.

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Bharat April 10, 2013 at 1:06 pm

If a Gift Received in an NRE account above Rs. 50000 from a non-relative living in Abroad be Taxable u/s 56 or any other provisions of the Income TAx Act?

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Manshu April 14, 2013 at 7:42 pm

I am sorry I don’t know about this.

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Manikaran Singal April 15, 2013 at 4:59 pm

Bharat, you mean gift recieved from NRE account or in NRE account? I guess you meant the former. If the gift above Rs 50k is recieved from a non relative living abroad than also the complete amount recieved will be taxable in your hands.

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Vivek April 15, 2013 at 10:31 am

Hi

Both me and my wife are working and both have taxable income from salary. If I gift her some money will it be taxable to me or her? If not what is the maximum that I can gift to her?

If the money that I gift her has to be clubbed with her taxable income then can I gift that amount to my daughet who is 2.5 years old?

Thanks
Vivek

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Manikaran Singal April 15, 2013 at 5:13 pm

Whatever monetary gifts you exchange between each other will not be taxable in anyone’s hands.BUt if you or she invest that amount somewhere than the gain will be added in the income of one whose income is on higher side.
You can gift any amount to your daughter, but the income generated out of that will be clubbed in your income (over and above Rs 1500/- p.a)

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Vivek April 16, 2013 at 8:55 am

Dear Mani

Thanks for your reply. Will I get any tax exemption if I gift cash to my wife or vice-versa?

Thanks
Vivek

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charu April 16, 2013 at 7:07 pm

hi,
how is the gift tax calculated. is the gift amount taken as a part of your total income or is it taxed under a seperate category.
for example, if i have an income which falls into 10% slab , but i receive a gift of say 5 lacs from my mother,
a) will it raise my tax slab to 30% ( income more than 8 l)
b) how much tax exactly will my mother will have to pay on an amount of 5 lac

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Manshu April 16, 2013 at 9:20 pm

Yes, when you include the value of gift in your income, you will get an increased tax slab, and will have to pay tax according to that.

Your mother won’t have to pay any tax on the amount she gifts.

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charu April 16, 2013 at 9:44 pm

thanks manshu,
but this is quite confusing…i was under the impression, that the person who receives gift , doesn’t have to pay tax, but the one who is gifting has to ..
please clarify..
also how much tax ( please tell me the figure) one has to pay on an amount of 5 lac…is it of the order of 25%..

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Manshu April 17, 2013 at 3:44 am

No Charu, the person giving the gift doesn’t have to pay tax since it is assumed that they have already paid tax on the income they generated which is the source of this gift.

The person receiving the gift has to pay tax as this is like an income source for them. So in your case, when you get the gift from someone who is not a relative as defined by the IT Act, that will be added to your income, and as a result you will have to pay tax. Over 5 lakhs is 20% plus surcharge, so it will be something like that. Though it really depends on what other deductions you get based on your expenses, savings etc. so I can’t tell you an accurate figure, but over 5 lakhs is 20% and less than that is 10% approximately.

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charu April 18, 2013 at 1:29 pm

please note that the person giving me the gift is my mother as i told in my first statement and kindly reread the query and clarify.
also can we make a gift deed retrospectively if the money involved was transferred through RTGS..

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Manshu April 18, 2013 at 8:03 pm

Even after reading your questions again, I think I have already answered them. You should probably post them in another forum where someone can do a better job of understanding what you are saying and answering it.

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charu April 16, 2013 at 7:08 pm

can i receive a taxfree gift from my mother’s sister and viceversa

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Manshu April 16, 2013 at 8:59 pm

Mani has shared an excellent link that shows gifts from which relatives are tax free. Mother’s sister is one of them.

You can see the whole list here Charu: http://taxworry.com/gift-meaning-relative-huf-exempt/

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charu April 16, 2013 at 9:48 pm

thanks Manshu ,I think the income from gifts should come under income from other categories and will be exempt from tax.please clarify..

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Manshu April 17, 2013 at 3:41 am

Yes, you are right, it will be exempt from tax.

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ashim April 17, 2013 at 9:57 pm

My father’s brother’s wife and daughter wish to gift me a land with building property valued at Rs 2.oo crores (current valuation of property for stamp duty purpose). State Stamp Duty rules do not recognise this as a Gift from a relative. and as such, stamp duty has to be paid accordingly. However, I wish to know the status of this Gift as per the Income Tax rules ie whether I have to pay Gift tax on the value of this property?

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Manshu April 18, 2013 at 12:43 am

Father’s brother’s wife is covered so gift from her will be tax free.

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ashim April 18, 2013 at 12:28 pm

Thanks for the response. Here the Gift is from both the father’s brother’s wife and daughter (wide and daughter jointly own the property). I understand that gift from the father’s brother’s wife is tax-free, but does that extend to a gift from the father’s brother’s daughter also.

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ashim April 18, 2013 at 12:29 pm

Thanks for the response. I understand that gift from the father’s brother’s wife is tax-free, but does that extend to a gift from the father’s brother’s daughter also.

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ashim April 18, 2013 at 12:36 pm

Is a Gift of a property from father’s brother’s daughter tax-free?

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Manshu April 18, 2013 at 8:25 pm

It is not tax free, and in the case of joint ownership, I really don’t know what would happen, better consult a CA.

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bipin April 20, 2013 at 12:57 pm

i want to know that monetary gifts of Rs 50000 or more received from friends is taxable or not

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Manshu April 20, 2013 at 9:07 pm

Yes, from friends they are taxable.

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YOGI April 20, 2013 at 9:43 pm

Have two queries
1. if my father give Rs 200000 to my son , who is 14 years old , will it be added in my income and will be taxable. my son is not having any PAN
2. Same amount if he gives to my wife, who has her PAN no, will it be clubbed with my income ?

in both the cases, how the interest (if the amount is deposited in bank) will be taxed.

Reply

Manikaran Singal April 22, 2013 at 8:56 pm

1. Gift from grandpa to grandson is tax free, but the income generated out of that gift will be added in parents income.

2. gifts from father in law to daughter in law is tax free but the income genererate of that gift will be added to father in law’s income.

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bipin April 21, 2013 at 12:20 pm

how much gift from friends are not taxable

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Manshu April 21, 2013 at 10:41 pm

Less than Rs. 50,000.

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Manikaran Singal April 22, 2013 at 8:21 pm

Bipin, gifts from non relatives (including friends) are non taxable if recieved upto Rs 50k in total. If the total gifts in a year from non relatives exceeds Rs 50k than total amount with no exemption of Rs 50k will be added in your income and taxed as per slabs.

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Atul April 22, 2013 at 12:15 pm

Hi,
I am going to be marry next month and have few questions:
1. how much amount can my parents in law gift to me tax free.
2. How much they can gift to their daughter tax free.
3. Can they gift anything like cash,gold, car, equity etc? are all of them would be tax free.
4. Suggest me the best way so that no gift tax arise in marriage.
5. Agter marriage suppose 6 months or so can they gift anything will it be considered tax free.

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Manikaran Singal April 22, 2013 at 8:33 pm

1. before marriage they are not your parents in law and thus limit of non relatives will apply.
2. Any amount.
3. To daughter …yes.
4. Gifts recieved on the marriage are totally tax free. Just from income tax perspective you have to keep record of each and every gifts and the person from whom you are recieving it. in case it is asked by authorities and to prove that these are marriage gifts.
5. yes.

Just a tax planning advise…if your would be spouse is a non working girl and thus has no tax file, then better to recieve all gifts in her name, so you can build up a good tax file for her. This will considerably reduce your tax liability.which may arise out of interest or any other income after investing these marriage gifts. Also this tax file will help you in long term.

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Kamal April 23, 2013 at 11:02 am

Please consider updating your original article to include the FCRA reporting requirement by receiving individual for Rs. 1 Lakh or more.

See below from Home Ministry Website.
Q.10 Whether foreign remittances received from a relative are to be
treated as foreign contribution as per FCRA, 2010?
Ans. The position in this regard as given in Section 4(e) of FCRA,
2010 and Rule 6 of FCRR, 2011 are as under:
Subject to the provisions of section 10 of the FCRA, 2010, nothing
contained in section 3 of the Act shall apply to the acceptance, by
any person specified in that section, of any foreign contribution
where such contribution is accepted by him from his relative.
However, in terms of Rule 6 of FCRR, 2011, any person receiving
foreign contribution in excess of one lakh rupees or equivalent
thereto in a financial year from any of his relatives shall inform the
Central Government in Form FC-1 within thirty days from the date of
receipt of such contribution. This form is available on the website
http://mha.nic.in/fcra/forms/fc-1.pdf

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Manshu April 23, 2013 at 8:27 pm

Thanks for sharing this info Kamal – I’m going to read little more on this topic and then update the post.

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Nihaal Merchant May 3, 2013 at 12:18 am

Dear Sir,

Can my first cousin (my father’s real elder brother’s son) who is an NRI staying in Kuwait send Rs. 10 Lakhs as a gift in my father’s or mother’s name?

I actually wanted the gift in my name, but having read this article I realise that if I get a gift from my first cousin, then it would be taxable for me. Please correct me if I am wrong?

Thanks in advance!

Regards,
Nihaal

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Manikandan May 7, 2013 at 10:31 pm

Hi Sir.. I want to invest in a commercial property in the name of my house wife, further as I was away from India for the past 11 Months continously I stand to be a NRI. In that case will there by any tax implications on me or my spouse if I transfer the money to invest in this property from my NRE account to my wife’s normal savings account and she makes the payment and get the property purchased in her name ?? Please advise !

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Manikandan June 1, 2013 at 9:18 am

Hi..Can Manshu or Manikaran Singal or anyone else reply to my query please ? Thanks !

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Manikaran Singal June 1, 2013 at 10:47 am

Manikandan, Whatever investment you want to make in the name of your spouse (who’s a housewife) , the income generated from that investment will be clubbed in your income and taxed accordingly. It doesn’t matter if you are NRI or not. Rules of clubbing are same for everyone.

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Charan May 10, 2013 at 6:59 pm

Dear Sirs,

I’ve read with great interest the advise provided to the many people with concerns regarding tax and property.
I’m a UK resident born and raised in UK and my parents both born and raised in India however married in the UK 42 years ago.
My grandfather purchased land 20 years ago which my father inherited following my grandfather’s death. My father died 2 years ago without leaving a will and my investigations revealed that ownership & title will automatically fall to the legal heirs.
My questions is if I sell the property/estate with a current market value 7crore what % tax are we required to pay? And the best way to move the cash back to the UK.?

Many Thanks for your kind support.!

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Aditya Soni May 13, 2013 at 2:17 pm

I have booked / purchased a flat in my Name in Mar’13 in which my father has contributed a sum of Rs. 23.7 Lacs and further he plans to contribute a sum of Rs. 5 Lacs at the time of registration & possession of the property. The amount of Rs. 23.7 lacs. was directly paid to the builder from his account through cheque.
What steps should he take to regularize this transation so that there are no tax / legal implication?
Further If Gift Deed is the way then what are the ways to make a Gift Deed?

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M D May 21, 2013 at 1:50 pm

CAN NRI SON IN LAW GIFT TO HIS FATHER IN LAW AND MOTHER IN LAW IF YES THAN WHAT IS UPPER LIMIT

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Manshu May 22, 2013 at 8:44 pm

Yes he can gift…and there is no upper limit.

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Deepu May 23, 2013 at 7:29 am

Hi,
I am a government employee and i wish to trade in stock futures through my mother’s(a house wife without any income) account.
1. If i gift her some amount and she invests it and makes profit would it be considered as my income or her income ?
2. If I give the amount as a loan will there be any advantage ? Or would it be better if my wife gives the money to my mother?
3. My wife is not working and is not having any income.

Thanks in advance

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Manikaran Singal May 29, 2013 at 10:00 pm

1.) her income
2.) Nope. as you are into service so you cannot show this as business expenses. So gift ot loan will hardly make any difference.
3.) If you gift your mother through your wife who herself is not working. This will make things bit complex. It may lead clubbing of income in your name.

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Mahesh May 25, 2013 at 10:16 am

Good Morning Sir,
1. I am Tax Consultant, I want to know that my client (Female) want to give gift of Rs. 2/- lacks to her Husband. So from the definition of Relative it is exempted from tax liability but how can I display this in IT return that she/he given or received gift in their IT return as per IT Act.

2. Whether the gift given or taken is necessary to take in written form? If yes, in which manner.

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siddharth May 29, 2013 at 6:00 pm

There’s a property on my mother’s name and we need to sell it in few days. We plan to re-invest Capital gains in form of new property and tax saving bonds. I want to know if my mother could gift me a part of her capital gain as a gift immediately after sale of property( in the form of new property or tax saving bonds) with zero tax gain on these funds. Following are the two ways which I can think of : 1) She buys a new property in my name and could show that in her capital gain investment. 2) She buys a new property in her name only and then immediately transfers it to me without any tax gain. Please help me and suggest some possible way for this situation.

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Manikaran Singal May 29, 2013 at 9:47 pm

1) if she buys property in your name, then capital gain tax could not be saved. As for that the property has to be in her name as sold property was of hers only.

2) She can do that,but in this case the property transfer charges (stamp duty, registration fees etc.) has to be paid.

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siddharth May 30, 2013 at 3:26 am

Thanks for your reply Mani ji. It is understood from your second point that there’s no 36 months restriction on gifting a newly bought property (no short term capital gain issues either).

My next query Sir.
Can she gift a part of original property to me and bring me co-ownership of property so that once property is sold, I can have my independent share of money .

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Ramsubramanian June 3, 2013 at 5:25 pm

Kindly let me what tax liability my wife will have if she gets cash gift from our daughter. My wife is 76 yrs of age and is not an income tax payee now for all the services we had done for my daughter and son in law when.when they needed in early life my daughter feels she has to compensate us as they are well off now, I know that the interest from the gift if invested in bank will be added to her other income please clarify
Thanking you
Rs

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Manshu June 5, 2013 at 4:37 am

The gift itself will not attract any tax and your wife won’t have to pay any tax on that but when she invests that anywhere and earns interest on it then she will be liable to pay tax on that.

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Ramsubramanian June 3, 2013 at 5:29 pm

Please reply thru e mail

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Chetan June 5, 2013 at 9:23 pm

Hi,
I have a query with regards to Transfer/Sale of property. The case being
Suppose i am buying a land from a non-relative. The FMV of the land is 50 lakhs. I am buying the same at 10 lakhs.
1-Will the balance amount of 40 lakhs (FMV-Consideration) be termed as gift received
2- if yes, then do i have to prepare a gift deed . and what will be the tax implication of the same(40 lakhs) in my hand
3- If no, what other things i would be required to take care while buying the property at a lower than FMV.
4- Any tax implication in the hands of the seller?

Thanks,

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Gopal June 7, 2013 at 5:01 pm

Hi, I am an NRI but I regularly file Income Tax returns in India for my India Income. I want to gift INR25Lacs to my father who is a resident Indian and an income tax assessee. I had transferred the requisite amount to my NRE a/c in India. But somehow, I transferred INR10Lacs to my NRO account. Now, Can I gift INR15Lacs from NRE a/c and INR10Lacs from NRO a/c to my father so that it is tax free in his hands? What documents, if any, may be required by the income tax authorities in India?

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