Monetary items acquired on events like birthday, anniversary, and many others. might be charged to tax. (Representative picture)
Though the items you get are usually not thought of your direct earnings, they appeal to taxes beneath Section 56(2) of the Income Tax Act, 1961
Even because the pageant season is occurring and Diwali 2023 is simply across the nook, folks in India are in a zeal of exchanging items; employers give items to workers, sellers to prospects, and pals to different pals, and many others. However, the items don’t come with out tax implications.
Though the items you get are usually not thought of your direct earnings, they appeal to taxes beneath Section 56(2) of the Income Tax Act, 1961, except they fall beneath the exempted class. Here are some guidelines associated to taxes on items everybody ought to know:
Gifts from Relatives
Any present acquired from family members is tax-exempt if the family members come beneath the definition of ‘relative’ for this goal beneath the Income Tax Act.
For this functions, ‘relative’ means partner of the person; brother or sister of the person; brother or sister of the partner of the person; brother or sister of both of the mother and father of the person; any lineal ascendant or descendant of the person; any lineal ascendant or descendant of the partner of the person; and their spouses.
Gifts From Friends
Gifts acquired from pals fall beneath the ‘income from other sources’. They are added to your earnings and tax is charged. However, the tax is levied when the worth of the items crosses Rs 50,000 in a 12 months. There isn’t any tax on items price lower than Rs 50,000 a 12 months.
Importantly, items acquired on the event of the wedding of a person are usually not charged to tax.
Gifts From Employer
Gifts from the employer appeal to tax in the event that they cross Rs 5,000 in a 12 months. Gifts price under Rs 5,000 in a 12 months from employers don’t appeal to tax. The items above Rs 5,000 are thought of ‘perquisites’ and taxed accordingly.
Movable and Immovable Property As Gift: Tax Treatment
The distinction between the consideration of the property (movable or immovable) and the worth of stamp responsibility might be thought of a taxable present, if acquired for insufficient consideration. It has an exempt worth of Rs 50,000. So, if the distinction is lower than 50,000, the switch won’t be thought of a taxable present.
According to the Income Tax Act, 1961, an immovable property acquired with out consideration by a person or HUF might be charged to tax if the immovable property (being land or constructing or each) is acquired by a person/HUF; is a capital asset inside the that means of part 2(14) for such a person or HUF; and the stamp responsibility worth of such immovable property acquired with out consideration exceeds Rs 50,000.
