Income Tax Return Filing: Are wedding gifts really tax free? All hidden clauses, conditions explained

Income Tax Return Filing: Weddings in India are a grand affair, when family and friends come together to celebrate the happiness of the couple who are tying the knot. Along with the celebrations come gifts, which are a way of expressing love and affection towards the newlyweds. And the icing on the cake is the fact that gifts received during weddings are not taxable in our country,. This comes as a huge relief for the couple and family who are already burdened by the expenses of the ceremony, and for others who worry about the tax implications of receiving such gifts from friends and family.

Here are all the tax implications of gifts received during weddings —

No tax on wedding gifts: What does the law say? 

For starters, Section 56 (2) of the Income-tax, 1961, is the legislation that governs covers the taxation of gifts received from anyone and at any occasion. According to the Act, gifts received by an individual during their wedding are not taxable. This means that any gift – be it cash, cars, house, jewelry, and stocks — received by the bride or groom during their wedding ceremonies are exempt from tax. This exemption is also applicable to gifts received by the couple from their relatives and friends.

No tax on wedding gifts: What are the conditions?

It is important to note that there are certain conditions that need to be met in order for the gifts to be exempt from tax. Firstly, the gift must be received by the individual on the occasion of their marriage only – not on engagement, or bidayi. 

Secondly, the gift must be received by the individual or the couple, and not by any other person in the family. Else, gifts valued beyond Rs 50,000 are taxable. If any of these conditions are not met, then the gift becomes taxable.

It is important to understand that this exemption is only applicable to gifts received during the wedding ceremonies. Hence, the tradition of keeping a record on of all the gifts and cash received during the wedding, including their value and the details of the person who gave the gift, is actually a useful one. And the practice of clicking photos with the couple while giving gifts, is also very useful, because maintaining such records helps in case there’s scrutiny later on. And if the income tax department doesn’t receive genuine proof of any item being received a wedding gift during scrutiny, then then the couple could be liable to pay hefty fine and penalty.

Another important point to note is that this exemption is only applicable to gifts received from individuals. Gifts received from companies, firms or other entities will not be exempt from tax, and the value of such gifts will be added to the individual's income and taxed accordingly.

Also, any vehicle received as a wedding gift maybe tax free, but in case it is sold or let out as taxi, then the amount received would be taxable.