Gifting is deeply rooted in Indian culture and is a standard part of auspicious festivals and life. It can take many forms, such as cash, jewellery, immovable property etc. Although many gifts do not have any tax implications, you may need to pay tax on some forms of gifts received.
Let’s take a closer look at the gift tax of India to understand the gift tax rates and exemptions.
The gift tax exemption list consists of the following:
For such gifts, there is no gift tax applicable.
For gifts received that do not qualify for an exemption, as listed above, the gift tax is calculated depending on the nature of the gift, its value, and your tax status. Here are some of the common scenarios:
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Gifts from blood relatives, spouses, parents, or in-laws are exempted from gift tax. Furthermore, gifts received during the recipient's marriage are also exempted. Other gifts received with a value of Rs. 50K or less in a financial year are excluded as well.
Yes, a gift received from family members and in-laws is an exclusion to the gift tax rule, with no maximum limit on the value of the gift. Gifts worth less than Rs. 50K in a financial year are also exempted and require no proof.
Cash received over Rs. 50K, immovable property with a stamp duty value above Rs. 50K and movable property like jewellery, paintings etc., with a fair market value greater than Rs. 50K are all subject to the gift tax. If you have paid any purchase value for movable and immovable property, then the delta between the purchase and current market values is taxable if it exceeds Rs. 50K.
If the gift you have received is taxable, then it may fall under one of two categories. Either you have received or inherited it without paying anything or may have spent a nominal amount less than its current market value. In the case of the former, if the value of the gift exceeds Rs.50K then the entire amount is taxable.
The reporting requirements for gifts are somewhat subjective. Typically, you don’t need to report gifts with an aggregated value of less than Rs. 50K in a financial year. However, it is advisable to maintain the paperwork for them, nonetheless.
