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:
- Receipts on occasion of marriage of the individual
- Receipts under a will or inheritance
- 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:
- Parents
- Parents siblings and their spouse
- Siblings
- Spouse of siblings
- Daughter and son
- Spouse of daughter and son
- Spouse
- Spouse’s parents
- 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:-
- If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
- If the property is gifted for a consideration, then the actual value of the property will be taken
In case of other properties:
- If gifted without consideration and fair market value exceeds 50000, then the fair market value will be taken as the final value
- 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:
- he/she is NOT in India in that year for period or periods amounting in all to 182 days or more, or
- 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.
hi,
my friends from u.s wants to buy a land in india, chennai. and amount is 6cr when converted to indian ruppees. i am aware of gift tax.
i just want to know, what are the documents i need? i askd with my hdfc banker. bt am nt satisfied with thier answer.
if my send me email that he is transacting money from u.s as gift to me, will that be taken as a proof.
Hello
When my wife and I were married 12 years ago, her mother gifted my wife a sum of money, which we placed in joint TD’s in India. The accounts are NRO and have remained with the same bank since then.
With the recent change in rules regarding transfer to NRE/repatriation, I would like to find out whether a gift received shortly after marriage meets the criteria for transfer to NRE or repatriation overseas (within the financial year limits allowed)?
Thanks
my wifes cousin that is her buas son that means my wifes fathers sisters son wants to give my wife a gift cheque of Rs.500000 would there be any tax element attached to it pls advice urgently thank you.
Please let me know that My father want to gift me a newly constructed floor of a house in Delhi of 150 sq yards, if I wish to get it registered in my name how much registration tax/duty I have to pay for it.
thanks & regards
I WANT TO GIVE GIFT OF RS. 50000 IN CASH TO MY MOTHER. CAN I AVAIL ANY CLAIM IN INCOME TAX
hi..my moms sister has transfered an amount to my bank account …she is a tax payee n residing ion India…will i have to make a gift deed or a letter from her and will I also be paying tax for the same…also whats the maximum one can transfer
thank un
Since she is a relative it isn’t taxable, and there is no upper limit either.
need to make a gift deed…my sister has gifted me a car…so need
to make a gif deed for the same..pls help
Hi, My mother in law is going to dispose of a house property registered in her late husband’s name and is going to give a third of the proceeds to my wife( apprx Rs.1300000) and another third to her son(my Brother in law). What is the tax implication? Does my wife need to pay tax on her share (she is a housewife)?
Hi. The flat is registered in the name of my mother and i have 1 sister who is married. Now i want to transfer the flat ownership to my name by the way of gift transfer and stamp duty is around Rs.180000/-. I want to know that the stamp duty to be paid by me will be considered for tax exemption or so? Please advise.
Suraj
Hi.. Am selling my house in Chennai and am due to receive about 1.6 cr for it.. I don’t own any other houses and am not employed anywhere.. Of the money received i wanna purchase two flats each about 50l each in my name,which i was told is tax exempted.. Apart from this i would like to gift 20 l each to my 3 siblings. Could you please tell me how this can be done? And also if there is any tax that i d incur? Also if not as Money can i gift them that amount in the way of a down payment for aprtments in their names which they could later pay off through housing loans..? Thanks in advance..
my mother in law gifted a property to me .I reconstructed and sale it what is tax position on it
Dear Sir ,
I have gift my partnership in my family owned business to my wife . Second partner in the firm is my son and there is no monetary transaction included but when i gone to register it at registrar office he said you have to 6% of stamp duty on it . As you cannot gift your partnership stake to anyone. Please advise .
Warm regards
Anil Jain
Hi, I am a NRI in USA. My brother in India bought an apartment on his and my father’s name last year. It was for 1 crore. I have been paying most of that on construction linked plan since last year and has payed almost half of it by now. I don’t want my brother and father to pay me back this amount. I have been paying this through my NRE bank account. The checks go directly to builder’s account. Any tax implications.? Is it possible that I can just say that I wanted to help my brother and father in this way and don’t want the money back from them? Can I avoid showing it like gift or lending.
Dear sir,
Can my son NRI/POI donate shares of indian companies to his mother (indian citizon).
I live in delhi. I am working but expenses are more than earning as my husband is unemployed. Also i m planing to do some study/course.
My younger brother works in US frm one year and earns well. I have requested him to send me some money for my need and some for downpayment of a flat for me. Can u pls tell me any tax implications for both of us? Also how best way he can send me money? Bank transfer or western union??? Urgent pls
My Parents want to gift me Rs 10,00,000 towards part contribution of Purchasing a flat of about 1 crore. Would they have to pay any Gift tax? Would any additional tax be levied on me?
No as long as tax has already been paid on this money – neither you nor them need to pay any tax again.
we have a flat in mumbai which holds name of my mother and her brother . the property is duely registered in 1981. now the said property is going for redevelopment. my mother’s brother wants to gift the property to my mother. what would be the tax implications?
my sister wants to give me Rs.5 lacs. she is working with LIC. how she can gift me
can you explain me.whether she has to do certain legal process or filing of document
Hi, My grandfather divided his entire immovable assets and distributed as per his will to his 3 sons. Can these sons gift their portion to their sons or daughters as per their will. If yes what kind of tax liability shall fall.Please advise . Regards
Hi,
As I understand gift from specific relatives is tax free for recipient. For donor also there is no issue. However if recipient is not a minor child, or spouse or son’s spouse then the interest/ money made on the gift is taxable from recipients income. Else interest/ money made on gift is taxable from donor income.
My question are: please consider gift higher than 50K.
1) I am married woman and my parents gave me cash exceeding 50k and I made 2FD for same in 2 banks. Bank has already deducted tax. I am showing interest as income from other sources. How should I show the tax that bank has already deducted?
Question 2) my father in law gave me money which I put in my ppf. I am showing ppf as savings under section 80C. Anything I need to be aware of?
Question 3) My parents gave me money to decrease liability of my home loan. Anything from tax angle here?
Question 4) my parents gave me money which is lying in my salary/savings account. Any tax implication here?
Please provide responses to me. Would be grateful. I am assuming in all above cases that money I initially received that is principal is not be shown as any income. If I m wrong please correct me and let me know which ITR form I need to fill.