Know Everything About Gift Tax In India

People often come to Chartered Accountants and Tax Experts asking them about the taxability of Gifts received by them from various sources. The most common and frequently asked questions regarding the Gift Tax In India are given below:

• When was gift tax abolished in India?
• How much money can your parents give you tax free India?
• How much money can my parents gift me from India?
• Is a Car received as gift taxable in India?

In this article we will answer all the questions generally asked by the people from the CAs and Tax Experts.

Gift Tax in India is a tax imposed on the transfer of property by one person to another as a gift. The concept of Gift Tax was introduced in India with the introduction of the Gift Tax Act, 1958. However, the act was abolished in the year 1998, and since then, gifts received by an individual are not taxed in India. But, there are still some specific circumstances under which a gift may attract tax liability.

Gifts can be in the form of cash, movable or immovable property, shares, jewellery, or any other valuable item. According to the Income Tax Act, 1961, gifts received from specified relatives such as spouse, brother, sister, parents, etc. are exempt from tax. The gifts received from other sources are considered as taxable income if they exceed the limit of Rs. 50,000 in a financial year.

One important aspect to note is that gifts received from foreign sources are also taxed under the provisions of the Income Tax Act, 1961. If a person receives a gift from a foreign source, he/she is required to report the same to the tax authorities and pay taxes, if applicable.

There are some exemptions from the gift tax in India. For example, gifts received on the occasion of marriage, gifts received from specified relatives, gifts received for medical treatment, gifts received as a will or inheritance, etc. are exempt from gift tax.

It is also important to note that gifts received by an individual in kind, such as property, are subject to stamp duty. The stamp duty is calculated based on the market value of the property and is payable by the recipient of the gift.

In case a gift received by an individual is taxable, it is included in the taxable income of the recipient and is taxed at the applicable tax rate. The gift tax is calculated based on the net taxable income of the recipient and is added to the other taxable income of the recipient for the financial year.

Gift tax in India has been a topic of debate for many years. While some believe that gift tax is necessary to curb the practice of tax evasion, others believe that it is a burden on the citizens and discourages them from making gifts to others.

In conclusion, gift tax in India is a tax imposed on gifts received from non-specified relatives and foreign sources. Gifts received from specified relatives and on certain occasions are exempt from gift tax. Gifts received in kind, such as property, are subject to stamp duty. The gift tax is calculated based on the net taxable income of the recipient and is added to the other taxable income of the recipient for the financial year. Despite being a topic of debate, gift tax continues to be an important aspect of the Indian tax system and it is important for individuals to be aware of its provisions and comply with the applicable laws.

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