What are the limits of Gift Tax in India ? Do I need to pay gift tax in India? What are the Income Tax rules on gifts received? Do you have to pay income tax on gifts in 2018-2019 ?
Receiving gifts is a habit from our childhood and we cherish those memories. But do you know that certain gifts have tax implications. While the Income Tax Act permits you to receive genuine gifts, there are set of rules regarding “gift tax in India”. A detailed understanding of the rules on this will help you in answering the queries from the tax department, in case your IT return is taken up for scrutiny.
What is Gift tax in India ?
Is gift money taxable in India?
The 5 categories of gift money that attracts tax.
The following 5 categories of gift will attract tax in India as per the current tax laws.
1. Any amount of money (in cash, cheque or draft)
If the total amount of money received by an individual from one or more persons during a previous year exceeds Rs. 50,000/-, the whole of such amount will be chargeable to tax. If you receive Rs. 40,000 as gift from anybody, there is no tax liability, but if you receive another Rs. 20,000 in the same year, you have to pay tax on the entire Rs. 60,000, because you have exceeded the limit of Rs. 50,000.
Gift Tax Rate in India 2018-19
Now this Rs. 60000 will be added to your total income and taxed according to your tax slab. Suppose you are in 20% of tax slab and by adding Rs. 60000 you come in 30% tax slab, you would be taxed accordingly.
2. Gift Tax on Immovable property in India without consideration
If any immovable property (without any consideration) is received, the stamp duty value of which exceeds Rs. 50,000/-, then the stamp duty value will be chargeable to tax in each such transaction.
3. Immovable property for a consideration which is less than the stamp value
If any immovable property is received for a consideration which is less than the stamp value of the property by an amount exceeding Rs. 50,000/-, then the difference between stamp duty value and consideration is chargeable to tax in every such transaction.
4. Gift Tax on Movable property in India without consideration
If aggregate fair market value of movable properties such as shares and securities, jewellery, archaeological collections, drawings, paintings or any work of art received without consideration during a previous year exceeds Rs. 50,000/-, the whole of aggregate fair market value of movable properties will be chargeable to tax.
5. Movable property for a consideration which is less than the fair market value
If movable property such as shares and securities, jewellery, archaeological collections, drawings, paintings or any work of art is received for a consideration which is less than the aggregate fair market value of the property by an amount exceeding Rs. 50,000/-, then the difference between aggregate fair market value and consideration is chargeable to gift tax.
How much money can be legally given to a family member as a gift ?
Gift tax India – Blood Relative and Family Exemptions
1. Any amount/property received from a relative
Yes, you can receive any amount as gift from your relative without any tax liability. Income tax on gift received from parents is tax exempt. Can husband give gift to his wife? The following are the relatives considered for this exemption:
(a) Spouse of the individual
(b) Brother or sister of the individual
(c) Brother or sister of the spouse of the individual
(d) Brother or sister of either of the parents of the individual
(e) Any lineal ascendant or descendant of the individual
(f) Any lineal ascendant or descendant of the spouse of the individual
(g) Spouse of the person referred to in clauses (b) to (f)
2.Money/property received on the occasion of marriage
The gifts received by bride and the groom from relatives, friends or anybody on the occasion of their marriage are free from any tax liability. The gift is exempt on the occasion of marriage and not on the day of marriage, hence gift received on tilak, tika and similar religious function prior to marriage day will also be exempt from tax.
3.Money/property received by way of a Will or inheritance
Any amount or property received by way of a Will or inheritance will be free from any gift tax in India.
How to document the gift transactions for scrutiny by tax authorities?
It is recommended that you keep documents for all the gifts received, so that in case of any scrutiny by tax officials, you can present the details. Gifts by way of movable property is required to be made in stamp paper and stamped. Registration of gift deed is not required in this case. But for making a gift of immovable property, the transfer must be effected by a registered gift deed. Gift of immovable property which is not registered is not valid as per law and cannot pass any title to the receiver.
Gift tax in India – Conclusion
The Gift Tax was introduced in India in 1958, but gift tax in India is now coming under the Income Tax Act.
So, if you are receiving more than Rs. 50,000 in a year from anybody other than your relatives, please remember there is a tax on that gift.
Do you have to pay tax on money given as gift on Cash ?
Cash Gifts above Rs 2 Lakh is subject to Penalty from 1st April, 2017, even if the gifts are from family members.
Income Tax on Gifts in India FAQs
Hence we hope this article will help you to understand the gift tax in India. Do not forget to add your valuable comments to this post.
I wouldlike to know ehther an amount of more than 20 lakhs can be given as gift by a person
to his/her sister/daughter for purchasing or fulfilling a house instalment and whether it would attract
tax under Indian Income tax laws?
Hi Narayanan
You can give give gift to sister/daugher without attracting tax under income tax laws.
But it is better to make a gift deed for the same.
My father was expired on Oct and we have sold our home property in April exact after 6 months of my father death. Amount received to my mother as spouse first hier. Is she has any liability for any tax. If she will give 50% to me and 50% to my sister is there any tax implementation on me and my sister pls inform
Hi Nishant
There would not be any tax liability on gift received. Please check for LTCG Tax because your mother have sold the property.
My son passed away two years ago . He has got a son aged 17 years now , studying in Plus one abroad . My daughter – in – law has divorced my son , two years after he was born . My son had a plot of land . This was sold about three years ago . He invested in the RECBONDS an amount of
₹ 31.6 lakhs to avoid Capital Gains a Tax .Myself , being the nominee , this amount has been credited to my account recently after the expiry of three years . I want to hand over this money to my grandson . Any gift tax is involved ? My son passed away all of a sudden without leaving any will .
Is there any way to transfer the money to my grand son without Gift Tax or Invome a tax
Hi Mr. S. Kalyanaraman
Thanks for you comments.
Grandfather can gift any amount to grandson without any tax liability. You can prepare a gift deed and keep it for future records.
There is no tax liability for the grandson for this amount. But, once he invest this amount, the income generated will be treated as his income and taxed in his hands.
Hello
I have gifted my son 7 lakhs vide bank transfer. I know, it does not attract any tax liability, but whether it should be shown on any income tax forms. I used to file Form 1 being a salaried individual.
Please enlighten me.
Regards
Hi Sanjay
Get a gift deed done for the same. Your son may have to show it in ITR.
My Niece( elder brother’s daughter ) wants to gift me her inherited (by succession) urban land of 2,662.0 Sq.yards (the present market value of the Sama is Rs.1,06,48,000/-)
Want to know the tax applicability as per Gift / income tax.
Kindly advice
Regards
Hi, My sister’s marriage is due on September. is there any gift tax implications if i transfer a sum of 5 lakhs to her in-laws parent’s account for meeting the expenses of marriage?
Hi Benjamin
Yes, there would be tax implications if you transfer it to her in-laws account.
If my mother sells her shares and transfer the amount to my account, are there any tax applicable to me?
Hello
I am an NRI residing in the middle east and want to send 2.5 Lacs to my Mother in law as gift.
Will it be taxable for my Mother in Law in India?
Thanks
Dear sir
i’m a senior citizen and a single parent . My brother is wanting to gift me some amount (around 20,00,000) am i taxable for this ? what ‘s the higher limit to receive gift amount ? right now my bother is in Uk and i’m taking care of our parents ,
i want receive cash from my sister as gift .what is proceidur A.Y.2010-2011
i have received 60k, 2.44 lacs and 1.93 lacs on different months in year 2017-18 from my real sister who lives in foreign. She has transferred money by NEFT from foreign. So i need to pay tax on it or not?
Hi,
I want to transfer money to India from middleast to help my brother in purchasing property. can I transfer this amount as gift to his or my parents account? amount will be around 50 lacs. is this exempted from tax?
Hi Sanjay
Yes, you can transfer the amount. It would be exempted from tax. Ensure to make a gift deed.
hello , can I get a flat transferred to my name from my brother in law valuing around 10 lacs. will I be subject to any tax?
Hi Naren
Yes, you can get it transferred. It would not be subject to tax if the transfer is effected with registered gift deed.
My maternal uncle and his wife wants to transfer his car registered in his wife’s name to me. No money transaction involved. The car’s evaluation on various auto websites shows upto a maximum value as 2.75L. Would getting the car registration transferred to my name lead to tax implications for me? Will having a gift deed avoid tax implications for me?
Hi
No, it would not have any tax implications. It is better to have gift deed done. I am assuming your maternal uncle as real brother of your mother, not the cousins.
I received a agrigulture inheritance land from my elders uncle son as gift deed whoes market value is 12lakh 90 thousand what taxable amount should be paid for 2018-2019 financial year,
You said above:
Cash Gifts above Rs 2 Lakh is subject to Penalty from 1st April, 2017, even if the gifts are from family members.
Please clarify. I want to give gift of Rs. 1.2 crore to my daughter for specific purpose.
If I (husband) purchase a flat for Rs. 70/80 lakhs with wife’s funds, will there be any gift tax and how the rental income from such property will be treated as husband’s or wife’s income? Is it necessary to draw gift deed?
Sir, I had received cash amount of Rs 1460000 from my father ( retired)for purchase of flat.. than ,here I m declaring as the gift deed than it will attract any tax?
Hi Mahendra
It will not attract any tax as of now. Any future income from this amount will attract tax.
Ensure to make a gift deed for the same and declare it in your ITR.
Hi
Specific question related to money gift to spouse (non working). Assume I transferred Rs 5 Lakh to wife and she invested in FD. She also has her own FDs.
Now on the interest earned on 5 lakh FD assume 40000, husband is liable to pay tax in first year. But what about subsequent years? Say on 1st April 5.4 lakh is invested in FD and earned 42000 as interest on 31st March next year. So still husband will pay tax on 42000?