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Gifts Tax

Tax on Gifts

Last Updated 27th Nov 2020

Tax On Gifts Gift Tax Meaning Exemptions
Gift of money Cash received as gifts exceeding ₹ 50,000 If money is received from family members or relatives
Gift of immovable property Value of stamp duty on immovable land or property exceeds ₹ 50,000 The recipient inherits the property
Gift of property other than an immovable property without consideration Any property (jewellery, shares, drawings, etc.) other than an immovable property without consideration exceeds ₹ 50,000 Gifts are received on occasions such as marriage or contemplation of death
Gift of property other than an immovable property with consideration If the fair market value of such property exceeds ₹ 50,000 If the property is received from a local authority, educational or medical institutions, trusts under Section 12AA
INCOME TAX CALCULATOR

Gifts Taxation in India

The culture of exchanging gifts is quite popular in India, be it an occasion for marriage, birthday celebration, festivities etc. and considered not just a symbol of love and affection but a symbol of social status as well. According to Gift Tax. 1958, gifts in any form, be it cash, cheques, demand drafts etc. are taxed in specific circumstances as stated in the law and are considered as ‘Income from other Sources’. However, the act which was initially introduced in April 1958 was abolished in October 1998. Thus, no taxes were imposed on gifts in any form until GTA was reintroduced in a new form and included in the Income-tax provisions in 2004.

How are Gifts taxed?

As per the provisions of Section 56(2) of the Income Tax Act, gifts are taxed in India in the following circumstances:

  • If gifts of value more than ₹ 50,000 are received in a financial year without any consideration then it is fully taxable.
  • Any Immovable property such as land, building received for amounts higher than ₹ 50,000 without consideration in a financial year is also taxable as per the stamp duty value of the property.
  • For properties other than immovable property such as jewellery, shares, drawings etc. received without any consideration and exceeds ₹ 50,000.
  • If the property other than the immovable property is received with consideration and fair market value exceeds ₹ 50,000.

Gifts Tax Exemption & Rules

As mentioned above, the taxes on gifts are imposed only in specific circumstances. Below-mentioned is cases when the recipient does not have to pay any tax on gifts.

Gift Donar Occassion Value
Gift received from relatives ( Relatives including spouse, brother or sister of parents, brother and sister of self and spouse, parents in law, any lineal ascendant or descendant of self or spouse) Any occasion Any Amount
Immovable Property (Land or property) NA Stamp duty is below ₹ 50,000
Any person Inheritance of property Any Amount
Any person Marriage Any Amount
Any person Contemplation of Death Any Amount
Any person NA ₹ 50,000
Property received from local Authority NA As defined under section 10(20) of the Income-tax Act
Property received from
  • Any fund
  • Foundation university
  • Educational institution
  • Hospital or other medical institution
  • Any trust or institution
NA As defined in Section 10(23C)
Property received from charitable trusts and NGO NA As specified under Section 12AA

Provisions Related to Stamp Duty on Gift Deed

To calculate gift taxes on immovable property or land stamp duty on gift deeds as on the date of agreement fixing is considered if the value of stamp duty exceeds ₹ 50,000. It is done to avoid higher stamp duty because of the time gap between the agreement date and date of registration in the following scenarios:

  • Date of agreement and the date of registration is different.
  • If the consideration is paid either wholly or partly through any modes such as cheque, bank draft or electronic mode before the date of agreement for transfer.

Also, in case of disputes in the calculation of stamp duty, the stamp duty valuation authority calls for records and passes an order in writing of value as per Section 50C and lower of the stamp duty value or value arrived by VO is considered.

FAQs

Is gifted property taxable in India?

If the stamp duty on immovable land or property, received without any consideration exceeds ₹ 50,000 in a financial year then the gifted property is taxed in India. However, if any gifted property is derived from local authorities or any fund, foundation university, educational or medical institutions, charitable funds etc. it is exempted from gift tax irrespective of the value of stamp duty.

What is the 2020 gift tax?

The provisions of gift tax are specified under Section 56(2) of the Income Tax Act, and the gift received from specific sources are taxable as ‘Income from other sources’ as per the Income Tax Slab Rate of the recipient.

Which type of tax is the gift tax?

A gift tax is a type of direct tax and is paid by the recipient of the gift while filing Income Tax Returns.

How do I avoid gift tax?

You do not have to pay gift tax if you have received cash or if the stamp duty value on immovable property is less than ₹ 50,000 .In cases, where the property is received from any medical or educational organisation, or charitable funds or local authorities or the property is inherited or gift received from family members you can file these gifts as ‘Income from exempt sources’ while filing Income Tax Returns.

Who can give a gift without tax in India?

If the gift is received from any family member, local Authority, any charitable fund or NGO, medical or educational institutions or on occasions such as inheritance of property, marriage, contemplation of death is not taxable in India. If the value of the gift is below ₹ 50,000, received from any person is also tax-free.

Is gift money from parents taxable?

No, as per the provisions of Section 56(2) of the Income Tax Act, a gift in any form received from relatives including spouse, brother or sister of parents, brother and sister of self and spouse, parents in law, any lineal ascendant or descendant of self or spouse is not taxable irrespective of the amount of gift.

How much money is gifted to a family member tax-free in India?

Irrespective of the amount of gift, the money given to any family member including spouse, brother or sister of parents, brother and sister of self and spouse, parents in law, any lineal ascendant or descendant of self or spouse is tax-free in India

Do you pay taxes when you receive a gift?

According to Section 56(2) of the Income Tax Act, 1961, gift on taxes is paid if the value of cash received or stamp duty value on immovable property received without consideration from anyone except the family members exceeds ₹ 50,000 in a financial year.

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