Gift as per Income tax act means property (both movable and immovable) and money (cash, cheque, draft, etc) received without consideration or against inadequate consideration. Let’s understand what movable and immovable property include on which income tax provisions apply:
Under the following situations, gifts received are non-taxable in hands of recipient irrespective of monetary value:
Here is the summary of all the scenarios for better understanding:
|Money (cash, cheque, draft)||Nil||If money > 50,000; whole amount taxable|
|Immovable property||Nil||If Stamp duty value > 50,000; Stamp duty value would be taxable|
|Immovable property (as defined above)||Received which is less than stamp duty value by an amount exceeding Rs 50,000||[Stamp duty value – consideration] would be taxable|
|Agricultural land in rural area||Nil/received||Nil|
|Movable property (as defined above)||Nil||Fair market value > 50,000; Fair market value would be taxable|
|Movable property (as defined above)||Received which is less than Fair market value by an amount exceeding Rs 50,000||Fair market value – consideration > 50,000 Fair market value would be taxable|
|Property/money on the occasion of marriage||Nil/received||Completely exempt irrespective of value|
|Any gifts not included in definition above||Nil/received||Completely exempt irrespective of value|
Gifts received from relatives are not charged to tax.
Friend is not a relative as defined in the list and hence, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).
Gift of money: Aggregate value of cash gifts received without consideration during a financial year would be taxable as Income from Other Sources in the hands of the recipient. However, if the aggregate value of such gifts is less than Rs 50,000, then it would be exempt from tax