Know about tax liability on Diwali gifts

Come the festival of Diwali, then the process of taking and receiving gifts also begins. Apart from the boxes of dry fruits and sweets, many times we also give some expensive gifts to our family, relatives and friends, like cash, jewelery or any other expensive things. But before buying gifts or before taking gifts, have you ever thought that you may have to pay tax on this as well?

Gifts under tax

You should know that if you get a gift from someone, then it will be counted in your personal income. Under section 56 (2) of the Income Tax Act, you may have to pay tax on this gift and can also get tax exemption. If precious things like cash, property, shares, securities, jewelery, archaeological collections, art, paintings, artefacts are found in gifts, then it is considered as ‘Income from Other Sources’ under the Income Tax Act, and add this income to your total. are given.

What is the rule of income tax regarding gift

The Government enacted the Gift Tax Act in April 1958, in which, under certain circumstances, it was started to tax the gifts. This act was abolished in October 1998. But in 2004, the government included it back in the income tax rules. It has become necessary for taxpayers to disclose the gifts in the ITR notification released in the financial year 2017-18.

Tax Rules on gifts from friends

If you have given a gift or a gift to a friend or unknown person outside the family, then there is a limit for that. If the value of the gift is up to Rs 50,000, then none of the gift takers and gift givers will have to pay tax. But if the value of the gift is more than Rs 50,000, then this amount will be considered as your other income and will be added to the regular income and then tax will be charged on it. These can be in the form of gift cash, jewelery, shares or securities.

Tax Rules on gifts from family

Under section 56 (2) (x) of the Income Tax Act, the picture has been cleared regarding gifts between relatives. According to this, if a gift is given or given in between families, then there is no tax on it.

1. If there is a gift transaction between all the relatives like parents, siblings, son-daughter, uncle and aunt, then no tax is levied.

2. No limit of 50,000 is applicable on gift transactions between relatives, one can take or give as much gift as one wants.

3. If the gift is taken and given in the marriage ceremony, then there is no tax on it.

4. There is no tax on gifts received as will.

5. If HUF is divided it will not pay tax.