ITR filing: Are gifts taxable in India? Salient clauses all income taxpayers must know

ITR filing: The taxability of gifts often leaves taxpayers confused since there are various provisions related to the taxability of gifts received by any individual or by those in a Hindu Undivided Family (HUF).

As per the Income-tax official notification, gifts can be classified in the following ways:

• Monetary gift: Money that is received without consideration.
• Gift of movable property: Specified movable properties received without consideration.
• Movable property received for less than its fair market value: Specified movable properties received at a reduced price; i.e. - for inadequate consideration.
• Gift of immovable property: Immovable properties received without consideration.
• Immovable property received for less than its stamp duty value: Immovable properties acquired at a reduced price; i.e. for inadequate consideration.

ITR filing: Are gifts taxable in India?

Gifts received by any person are taxed under the head 'Income from other sources' in the hands of the recipient. Gifts up to Rs 50,000 in a financial year are exempt from tax.

Exemptions from gift tax

• As per the Income-tax official website, gifts received from relatives such as the spouse, siblings, sibling's spouse, spouse's siblings, parents' siblings, any lineal ascendant or descendent of the individual or the spouse of the individual or any lineal ascendant or descendent of the spouse of the individual's spouse are exempt from tax.
• In the case of HUF, gifts received from any member are exempt from tax.
• Here one needs to note that friends are not ‘relatives’ hence, their gifts are taxable.

Are wedding gifts taxable in India?

• Gifts received on the occasion of marriage are exempt from tax whereas on other occasions like birthdays, anniversaries, etc., gifts received are taxable.

 Also read- Income Tax slabs, rates and exemptions for senior citizens: Know how income tax on pension is calculated

Is inherited money taxable in India?

• Money received by inheritance or under a will of inheritance
• Money received in contemplation of death of the payer or donor.
• Money received from a local authority [as defined in Explanation to section 10(20) of the Income-tax Act].
• Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C). [w.e.f. AY 2023-24, this exemption is not available if a sum of money is received by a specified person referred to in section 13(3)]
• Money received from or by a trust or institution registered under section 12A, 12AA or section 12AB
• Money received by any fund or trust or institution, any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv)/(v)/(vi)/(via).  
• Money received as a consequence of demerger or amalgamation of a business reorganisation of a co-operative bank under section 47.

(Inputs from income tax official notifications)

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