How are gifts taxed in India?

Even gifts are taxable in certain cases. Money, over Rs. 50,000, received from someone who’s not your relative is taxable. This limit is for the entire financial year and not just a single transaction. You are also liable to pay tax in the unlikely event of a non-relative gifting you an immovable property, if its stamp duty ready reckoner value exceeds Rs.50,000. If someone gifts you movable property, like art or bullion, for free, it’s not necessarily tax-free. If its fair market value exceeds Rs. 50,000 the entire amount will be taxed. If you buy movable property for a price that’s below its fair market value then the difference between the two is considered as a gift in your hands. If the difference exceeds Rs. 50,000 then the entire amount will be taxable. So it’s clear that it is of utmost importance to know whom the Income Tax Act considers a relative. Because any gift from a relative, is completely exempt from tax.

Here’s your tax-exempt family tree.

Gifts from your spouse.Your parents.Your spouse’s parents.Your grandparents. Your spouse’s grandparents. Your parents’ siblings.Your siblings.Your spouse’s siblings.Your children.Your grandchildren.

There are two special cases where gifts from even perfect strangers are exempt from tax. k

One, on the occasion of marriage, and the other by way of a will or inheritance.k

Also Read:-Gift Tax Act And Why Gifts Are Taxed!