Received Gifts; Here's How You Can Get Taxed

Outlook Money

Tax on gifts 

There are specific provisions that govern how gifts are taxed. 

Gift Exchanges 

Between Family Members- Gifts exchanged between the family members are fully tax-free. As per section 56(2) “Family members include the spouse, siblings, siblings of the spouse, siblings of either parent, any lineal ascendant or descendant of the individual or their spouse, and the spouses of all such persons. 

Between Extended Family And Non-Relatives 

Gifts that are exchanged between extended family members and non-relatives that exceed the amount of Rs. 50,000 are taxable unless there is some special occasion like marriage. 

Financial Gifts 

Documents; In case of the financial gifts, one needs to maintain the documents ensuring the gift is legal and tax compliant.

Gift Deed

There needs to be a written gift deed that specifies the details of the gift, donor, and recipient. 

Relationship Proof

There has to be evidence of the relationship between the donor and recipient, especially for claiming tax exemptions.

Other things to keep in mind 

For financial gifts, other important elements to be kept in mind include valuation reports and Income tax return.

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