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,
If an uncle, a resident of India, is the beneficiary of a family trust fund set up by his brothers son, ie his nephew, in the U.S., what are the tax implications here for him, the beneficiary? I believe nephew to uncle does not constitute being a relative for gift?
Me & my wife ( Indians living in India) want to separately gift money t0 our daughter, son in law & grand son ( all British citizens living in UK). How much money each of us can gift every year and what will be tax implications at our end as well as their end at UK ?
Is remittance received from my daughter and SIL who are now US CITIZENS into my S/B a/c in Mumbai to be treated as my Income for I-tax purposes? Under what section/s it is exempt and if so what is the limit for such Remittance recd.by me as Sr.Citizen retired in India from my Relative abroad who are Citizens of US? Further is there a necessity to show such amounts in my IT-Return ITRI?
NO SOLUTION from anybody?
Hello
I have got a land from my brother in law (sisters husband). Now I am planning to develop the land. Would like to understand what would the taxation be if
(a) Land value – 100 (assumption)
(b) Construction cost – 150 (assumption)
(c) Sale price – 350 (assumption)
What will the profit be for me after developing assuming development completed in 1 year
Case 1: 350-150 [c-b] i.e. 200
Or
Case 2: 350-(150+100) [c-(b+a)] i.e. 100
Kindly let me know
Is there ay limit on the frequency or amount of cash gifts to my father’s sister. I am ex-Indian living in USA and my aunt is in India. I want to send amounts several times a year
my friend an NRI is sponsoring tution fee of my daughter for NRI Quota admission.my daughter is major and indian resident. Is she or I have any tax liability.
i sold a property. With the amount which I got can I buy a property on my daughter’s name and gift it to her? Will it attract any tax like capital gains for me or my daughter
Your selling of property will surely attract capital gain tax, but the txn of gifting of the to your daughter for buying property or buying it in her name will not attract any tax as it will b treated as gift.
it would b wise if u buy property in ur name which will help u in saving capital gain tax on property ( if long term) and bequeath this property through WILL. Though u can also gift ur proprty to ur daughter but in that case also some costs like stamp duty etc. are involved
Sir,
My friend an NRI is sponsoring fees for my daughter’s NRI Quota admission in India. Should it be taxable for my daughter or me? My daughter is major.
I want to gift Rs Five lakhs to my daughter in law , is there any gift tax for any of us. Both r pan card holders ,
Is there any clubbing of tax
Though this transaction will be out of purview of gift tax as father in law can gift any amount to daughter in law. But yes, this do attract clubbing and whatever your daughter in law earns out of that money if she invest it somewhere then that earning will be clubbed in your income and taxed accordingly.
hello,
i am swapna mukherjee.if my brother in law gift me some property valued about 6,77,000.Then what will be the tax and stamp duty fees.how much it will be…I need to know hurry..what is the percentage of tax and staming.
Hi,
If i receive money from my brother who is an NRI(amount 3 lakhs) & invest that within a month to buy property, if i sell that property after 3 years are there any additional tax liabilities apart from short term gains?
thanks for revert.
in case i am recieving a cheque of 50000 rupees as a gift that will be exempyed in my hands. I want to register a gift deed between me and the person giving it, so of what amount of stamp paper will be required on which i can register the deed
hi, I am an nri. I want to gift my property to my niece who is also an nri property worth is of rs. 2100000/- . Can u pls say will I have to pay any tax Amount or it’s not applicable
Can a NRI son in law give money to his father in law to buy a property. The father in law don’t have any money from his side in this property transaction. Will the money from NRI son in law will be taxable? How much money he can send?
Dear Sir,
I want to give the amount received from selling a residential plot which is a joint property (myself and wife) to my son who is residing in US after paying the Income Tax in India for the above amount received . Pl. suggest how to send it by way of gift or otherwise. If sent as gift after paying Income tax here will it be taxable in US and what is the maximum amount that could be sent in dollars. since the property is in joint name should I take two cheques from the buyer. pl. advise.
Thanks for you effort for clearing so many queries for different issues.
Well I have one query as well, hope you can help in to understand…
I booked a flat in name of my Brother and me in 2011 and now same is ready for registry. My father paid a handsome amount over the period of time from his bank to fulfill the builder payments.
My query is, after the registry done for that flat under mine and brother’s name, do we need to show amount paid by my father in our ITR/ records? Or same can be considered as gift from Father to Son to buy property?
Dear sir, One of my american friend wanted to send me a gift in cash. How and what are the procedures i need to follow to recieve it?
Please help
Dear sir,
I am an NRI from Australia. My mother in Law wants to donate some agricultural land to my wife. Is it allowed by Law? Is my wife who is also NRI is allowed to receive it? are we allowed to sell it in the future is she receives it?
Kind Regards
John
My mother Sister has some agriculture land..she is going to sell it, money will come is tax free . Now she going to gift me more than 50000 .. is this taxable ?
I would like to know that a elder brother gifting to younger brother for 10 to 15 lakhs by way of cheques mentioning PAN NO and what is the procedure require.It will do if simply write down the details on a paper gifting the amount.Whether it require to register? Please explain. Elder brother is not filing the return due to no taxable income and above 80 years of age.
Thanks ,
Dipak