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.
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.
Thanks ,
Dipak
I am a Permenant resident in united kingdom. I want to gift 10000 pounds to my father. Do i have to first transfer it to my NRO Account and then gift it or I can Transfer it Directly to his account in India? Please help
Can my uncle give gift of rs 5 lakh to my daughter? Is it taxable ? Pls help
my children receive cash during diwali, birthdays and special occasions. What is the tax treatment of this cash if I am regularly depositing this amount in their bank a/c ( minor a/c) linked to my a/c?
My mother’s brother wants to gift me a jacket which is the cost of about 5200 inr..he is a distant relative so will the gift be tax exempted?
Sir i want to gift rs 50000 to my mother or brother.can i claim this as deductions in my ITR.if yes then under whuch section?
I am 19, and am about to get gold worth more than 50000 USD from an American national (no relation)as a gift. The transaction will be carried out in US. Am I liable to pay taxes. If so, do I have to pay it in both countries? If I keep the gold in US will I be taxed in future just to own it? How much % will be taxed.? I have no other source of income.
I have step son leaving abroad can he gift me any amt of money or it is taxable
sir, my friend is sending gift abot 20 lakhs from uk. how much tax i pay
Hello Sir,
my real brother living in canada want to gift me a plot of land situated in moga(panjab).Guide me with proper procedure and probable charges which i need to pay for this gift deed.Can my brother fulfill all formalities from canada.Later i have to construct house on this plot.for that i will have to take loan ,so guide me about the proper procedure
Sir,
I received a gift worth 5 lakhs and sold it for 6.5 lakhs. I donated the entire amount of 6.5 lakhs towards prime minister relief fund. I just want to check if I will have any tax liability on any of the above mentioned amount.
Thanks and Regards
Hi my father is willing to gift a land to his sister is it taxable as other sources, Both are residents…
hi !Thanks for d article..my question is that if my nri brother in law (jijaji) wants me to give interest free loan for one year then is there any tax liabilities on us,secondly what will be the procedure of returning the ammount to him in US
sir,
How much amount that i,can accept as a gifts from non relatives individually from each person each can give me less than Rs 20000.and around 100 friends are there to me. Shall i accept gifts around Rs 20 lacks on the occasion of commencement of my business. kindly guide me.Weather any tax implications are there and these are come under exempted gifts or not ?is there any income tax has to be paid on those gifts kindly guide me.
thanking you sir
Hi,
One of my friends from US has gifted me $5000.
What will be the tax implications on the same.
Kindly advice.
Can my Father’s Brother’s Children give gifts to me
My husband wants to gift a flat on my name what is the procedure to transfer the flat on my name and do i have to pay or just make a gift deed agreement. what is the procedure if i am a housewife or working.
Dear Sir,
My NRI son gifted me Rs.40 lakh in Nov. 2014 from his NRE accounts through cheques in my favour. Can I buy a residential flat with this amount in my name? He has signed a gift deed in my favour which is witnessed by his two colleagues and signed by me at his redience abroad in token of having aceepted the gift and he gave me two cheques which I have not yet deposited in my bank account apprehending some tax liabilities and its utilization for purchase of a flat. These cheques are valid for three months from the date of issue. Is the gift deed given by son in Nov.2014still valid, if I now deposit those cheques bearing date of November in my bank account and use the amount for purchase of a flat? Or Do I need to have fresh gift deed? Now we can not sign gift deed together as my son is now in foreign country and I am in India.
Your reply/guidance is awaited.
Thanks & Regards.
Mr Thakur, though i am replying too late, but your transaction seem as genuine transaction to me.
You can do anything with the gifted amount given to you by your son.
sir i won bike in lucky draw its amount 60000 its cut 30% tds on this.tell its tax can be return and how
Hey,
If I receive ~5lakhs INR from my parents, do me and my parents have to pay gift tax for the amount.
If yes, how do we declare this as gift from parents and next steps for both the parties.
Please advice.
Thanks,
Sridevi
Any gift of any amount received from parents will be tax free in the hands of Children ( Above 18 years). Parents will give gift from tax paid/taxable or non taxable income income , whatever be the source of their income, so there’s no question of gift tax on them too.
For declaring as gift, its better that while doing transaction , both parties write a simple agreement/letter/note on plain paper, by mentioning PAN numbers of each donee and donor, that money is being given as gift under natural love and affection
can a customer buy a plot from developer which is gained by a developer as gifted land?