Gifts reflect our admiration for the receiver and is seen as a gesture of goodwill. It is quite popular to offer gifts on special occasions such as birthdays or weddings or any important occasion. India being a secular country has numerous festivals where gifts are exchanged and according to the Gift Tax of 1958, gifts of any form such as cash or objects or any such material is considered as an “Income from other sources”. Although this tax was introduced in April 1958, it was quickly dissolved by October 1998. This lead to no gift tax on any form of gift until it was reestablished in a new format in the income tax provisions in 2004.
How Are Gifts Subjected To Tax?
Corresponding with the provisions of Section 52(2) of the Income Tax Act, the gift tax is identified in these various instances:
- It is positively taxable if the gifts received in one financial year amount to ₹ 50,000 without any contemplation.
- Landholdings or other such properties that amount more than ₹ 50,000 in a given financial year given as a gift can be a part of the gift tax as established by stamp duty value of the property.
- It is also applicable on material gifts such as jewellery or shares if it transcends ₹ 50,000.
- If property besides immovable estate is gifted with consideration and results in ₹ 50,000 or more, it is applicable for the gift tax.
Exclusion Of The Gift Tax and Rules