Gifts, who would not like to receive them? Gift is something we all like to receive from our beloved ones. But, a very common and frequent question running in the mind of taxpayers is the taxability of gifts in India.
If I receive a gift from my father, would it be taxable in my hands? Do I need to pay gift tax on it?
If I gift a car to my Fiancée, is it taxable in the hands of my fiancée? What are the tax implications?
In this post let’s discuss – What is a Gift? How to know if the gift received by you is subject to income tax in FY 2020-21 / AY 2021-22? List of Relatives from whom you can take Gift(s) without worrying about income tax implications. How does classification of property i.e., movable & immovable has an impact on Gifts? – Let’s make this simple and easy to understand 🙂
What is a Gift?
A gift is Money or House, Shares, Jewellery etc. that is received without any consideration, or simply an asset received without making a payment against it and is a capital asset for the Recipient. It can be in the form of cash, movable property or immovable property.
(A capital asset typically refers to anything the individual owns for personal or investment purposes.)
The person who is giving a gift is called the ‘Donor‘ and the person receiving the gift is known as ‘Donee‘.
Do I have to pay income tax on Gift?
Below are the important points that you should be aware of regarding tax implications on Gifts.
- Gifts up to Rs 50,000 a year: A recipient will not be assessed to any tax if the value of gift is less than Rs 50,000 a year irrespective of who gifts the money. Also, you need to add the total value of all the gifts received in a financial year and if the total value is less than Rs 50k then it is exempted from income tax.
- Gifts from Relatives : Below is the list of ‘Relatives’ from whom you can receive gift(s) and there is no need to pay any income tax; (you can receive unlimited monetary or non-monetary gifts).
- Brother
- Brother’s Wife
- Sister
- Sister’s Husband
- Spouse (Your wife / Your husband, if married)
- Spouse’s Brother
- Spouse’s Brother’s wife
- Spouse’s Sister
- Spouse’s Sister’s husband
- Spouse’s Father
- Spouse’s Mother
- Spouse’s Grand Father
- Spouse’s Grand Mother
- Spouse’s Great Grand Father
- Spouse’s Great Grand Mother
- Mother
- Mother’s Brother
- Mother’s Brother’s Wife
- Mother’s Sister
- Mother’s Sister’s Husband
- Father
- Father’s Brother
- Father’s Brother’s Wife
- Father’s Sister
- Father’s Sister’s Husband
- Grand Father
- Grand Mother
- Great Grand Father
- Great Grand Mother
- Son
- Son’s Wife
- Daughter
- Daughter’s Husband
- Grand Son
- Grand Son’s Wife
- Grand Daughter
- Grand Daughter’s Husband
- Non Relatives (non-family) – If you receive a gift from an individual who is not a relative (any other person who is not in the above list is treated as non-relative for Gift tax purposes) then the value of the gift can be subject to income tax.
- Type of Gift
- Cash or Money – A gift can be in the form of cash or money. (Latest update : Cash Gifts above Rs 2 Lakh can be subject to Penalty u/s 269ST w.e.f 1st April, 2017, even if the gifts are from family members. Read : ‘Rs 2 Lakh Cash Transaction Limit | Details & Examples‘.)
- Movable (or) Immovable Assets / Property – The income tax Act clearly defines the list of immovable and prescribed movable properties for the purpose of Gift tax. If you receive a gift (movable or immovable) from a relative then no tax will be levied. However, if you receive a gift (movable or immovable) from non-relative then up to Rs 50,000 (stamp duty value of the immovable property or Fair market value of movable property) is tax-exempted.
- Land or building or both (immovable)
- Shares & other financial securities
- Jewellary (precious metals, ornaments, precious stones, etc.,)
- Archaeological collections
- Drawings / Paintings
- Sculptures or any work of Art
- Bullion – Gold bars, Silver bars etc.,
- None of the above – Any other assets which is not listed in the above list will not be charged to tax. For example : If you receive car as a gift from a relative or non-relative, there will not be any tax on it as ‘car’ is not listed in the prescribed list of movable properties as per the IT Act.
- Occasion – As per the provision of taxation of gifts, any Gift received from any person on the occasion of the marriage is not liable to income tax. There is no monetary limit attached to this exemption. But, taxes are applicable if gifts are received at the time of Engagement or marriage anniversary.
To summarize above points;
- If the total value of gifts received is less than Rs 50,000 in a financial year, no gift tax is applicable.
- If you receive gifts on the occasion of your marriage, no tax implications. The gifts can be from a relative or non-family member and movable/immovable ones.
- If you receive gifts from any of your family member (as in the list), no need to worry about tax implications
- If you receive gift(s) from non-family members, kindly first check if the stamp duty value or Fair market value of the gift is less than Rs 50k or not. If the value of gift (movable or immovable) is less than Rs 50,000 then no need to pay any tax on it. If it is more than Rs 50,000 then the entire stamp duty value of the immovable property or fair market value of movable property will be charged to tax in the hands of the receiver.
Examples
- Illustration 1 : Mr Salman receives Rs 1cr worth car as a gift from his friend on the occasion of his marriage. Is this gift subject to taxes?
- First check – Is it above Rs 50k? Yes.
- Second Check – Is it from a family member? No.
- Third Check – Is the gift (type) listed in the prescribed list of movable or immovable properties? No. Car is not listed in the prescribed list of movable properties. So, the gift is not charged to tax.
- Fourth Check – Is the gift received on the occasion of marriage? Yes. So, no taxes will be levied.
- Illustration 2 – Mr Salman gifts a Diamond necklace worth Rs 2 cr to his Fiancee (Katrina), is this subject to taxes in the hands of his fiancée?
- First check – Is it above Rs 50k? Yes.
- Second Check – Is it from a family member? No. Fiancee is not a family member.
- Third Check – Is the gift (type) listed in the prescribed list of movable or immovable properties? Yes. Diamond necklace is a movable property and the value is more than Rs 50k so the entire gift value is subject to taxes in the hands of Katrina.
- Fourth Check – Is the gift received on the occasion of marriage? No.
- Illustration 3 : Mr. Aamir gifts his house to his friend Kajol. The market value of the building is Rs. 8,40,000 and the value of the building adopted by the Stamp Valuation Authority for charging stamp duty is Rs. 9,00,000. What is the tax treatment in this case?
- In the given case, the property is a capital asset for Kajol. The property is received from his friend (friend is not covered in the definition of relative), property is not received on any specified occasions and the stamp duty value of the property exceeds Rs. 50,000. In other words, all the conditions required to tax the gift are satisfied and hence the stamp duty value of the property i.e. Rs. 9,00,000 will be charged to tax in the hands of Kajol. It will be charged to tax under the head “Income from other sources”.
- Illustration 4 : Mr. Kanhaiya received following gifts during the financial year 2015-16:
* Rs. 2,80,000 from his friend residing in Canada.
* Rs. 25,000 from his elder Sister residing in Bangalore.
* Rs. 84,000 worth of Shares from his friend residing in Varanasi . What will be the tax treatment of these gifts?- Rs 2.8 Lakh is taxable as he received the gift from non-family member. The gift of Rs 25k will not be charged to tax because ‘elder sister’ is covered in the definition of ‘relative’ and Gift of Rs 84k worth of company shares will be charged to tax. Shares are prescribed movable property and their worth is more than Rs 50,000. Also, the gift is from his friend who is not a ‘relative’.
Latest Article : Property Gift Deed – All you wanted to know!
Important Points
- The following list of gifts are fully exempted from Tax whether they are received as Cash, or any other form;.
- Gift received under a Will or by way of inheritance.
- Gift in contemplation of death of the donor.
- Gift from any local authority.
- Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10 (23C).
- Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.
- Any sum received from relatives or on occasion of marriage, is not to be included under the head ‘Income from Other Sources’ while filing your taxes. There is no requirement to show these gifts in ITRs as it does not fall under the definition of Income chargeable to tax.
- But, if you get a property through a registered gift deed (wherein your PAN is quoted), you can show the value of the gift received as ‘Exempted Income‘ in ITR. This is to avoid any scrutiny by income tax authorities in the future. Also, whenever you receive any gift it is prudent to have gift deed executed.
- If you receive gift (cash/movable/immovable property) from non-family member which is above Rs 50,000 then you can show it under the head ‘income from other sources’. You have to pay taxes as per your income tax slab rate.
- Kindly note that rules of clubbing of income comes into picture if you gift a certain amount to your spouse, or minor children or Son’s wife. Any income earned by the recipient on the gift shall be clubbed with the income of donor (you).
Budget 2019-20 (latest update) :
- Currently gifts given by Indian residents to non-resident Indians – apart from the specified list of relatives – would be claimed as non-taxable. Because, the onus was on the recipient to disclose such gifts and then pay the gift tax.
- But, budget 2019-20 proposed to amend the rules to make it mandatory for recipients (NRI) to disclose such gifts received if they originate in India and then pay a tax on it.
- The value of these gifts is added to the income (exceeding Rs 50,000), if made to anyone apart from the specified relatives or blood relations and will be taxed as per the normal slab rates applicable to resident Indians, except if a double taxation treaty prohibits the same.
- The changes will be applied for all such transfers made on or after July 5, 2019. This amendment will take effect from April 1, 2020 and will, apply in relation to the assessment year 2020-21 and subsequent assessment years.
I hope you like this post. Kindly share your views & comments. Thank you!
Continue reading :
- 5 ways of transferring your Immovable (or) Real Estate Property
- Sale of Inherited (or) Gifted Property & Tax implications on Capital Gains
- Nominee Vs Legal Heir : Who will inherit (or) own your Assets? | Importance of WILL
- Property Gift Deed – All you wanted to know!
(Image courtesy of iosphere at FreeDigitalPhotos.net) (Post Published Date : 21-April-2016)
One Mr X wants to gift Rs.80 Lakhs to his son in law. He does it. Now, will there be a Gift tax? If so, how much does the son in law will have to pay as gift tax? Say….son in law pays Rs.Y to the govt of india as gift tax. The question is whether the entire remaining amount (80 Lakhs – Rs.Y) can be considered as white by the son in law?
helloo, my father gifted my 25lacs in my savings account , is it taxable or exempted, if not is there any maximum value to be recieved as gift?
Dear yash,
It is tax-exempted amount.
Suggest you to declare it under ‘Exemption income’ while filing your ITR.
Hi…My organization has received gift of more than 1 Lakh from my friend residing in foreign country. I just want to know how to handle this transaction in legal way
Dear Gokul,
You mean to say that your first has received the gift?
If so, kindly consult your CA/auditor in this regard..
For gift in form of cash from maternal uncle in excess of 50000 for claiming exemption under the section 56 of the income tax act whether simple note on plain paper giving the details of the donor and donee mentioning the amount along with witnesses details suffice or has to be in a affidavit or notarized?
Hello
I have received Cash Gift of Rs 3 lac from my father, which is deposit in my Bank account & then i made POST MIS Investment but question is
1) is it taxable or not ??
2) I should show this income 3 Lac in ITR ?? IF Yes then at which place in ITR ??
Dear SURESH,
1 – It is a tax exempted transaction between your father and you. However, the interest income on MIS a/c is taxable in your hands.
2 – You can disclose it under ‘Exempt income’ section of ITR form.
Thanks for reply,
But if same amount received by my wife from My Father then it is taxable ?? (here wife received gift from Father in law)
Dear Suresh,
Then the interest income received will be taxable in your father’s hand.
“Kindly note that rules of clubbing of income comes into picture if you gift a certain amount to your spouse, or minor children or Son’s wife. Any income earned by the recipient on the gift shall be clubbed with the income of donor (you).”
Related article : Clubbing of Income of Spouse & Child : Definition, Scenarios, Examples & Exceptions
Hi
Husband and wife owns a flat jointly and they want to purchase a flat in other state, will it consider as two flat for both? Both are working and paying tax.
and what you recommend.
Dear Anil,
If the second property will be owned jointly? If yes, then it will be considered as two owned properties for taxation matters.
Thanks for the detailed info.
We (me, my brother and my mother) are selling our land so the amount would be divided to 3.
My brother and my mother both are going to give their share as a gift to me.
So can you please let me know that, will i have to pay tax 2 times here ? (First when we all 3 got amount and 2nd time when they gave me gift ?)
Dear Praj,
Are they going to relinquish their shares in the property before selling it?
Or
Sell and then they will Gift the amount (proceeds) to you? May I know the plan??
sell first and then gift that amount
Dear Praj,
The amounts (as Gift) given by your mother and brother are tax-exempt.
When three of you sell the Property, you have to pay taxes on Capital gains (if any).
Related article : How to save Capital Gains Tax on Sale of Land / House Property?
Hi Sreekanth
I have given 20 lacs from my salary savings as a gift to my mother (senior citizen 79 years). Not kept in FD in her name. For her day to day needs
Do i need to show the amount in her ITR returns as what and where.
typo mistake
Kept the amount in FD in her name
Dear Anil,
Did you transfer the amount in non-cash mode?
You can disclose this amount under ‘Exempt income’ section of ITR.
Related articles:
* Lump sum Investment options for Retirees/Senior Citizens | Where to invest my Retiral benefits to get Regular Income?
* List of all Popular Investment Options in India – Features & Snapshot
Thanks for the reply.
Yes i have transfered the amount via cheque and have notarized the same in Rs.100 stamp paper.
I have to show the amount in Exempt Income section not in other income right.
Or show it in other income and than also in exempt income.
Dear Anil,
You can just declare it under Exempt income.
The income generated on this amount can however be a taxable income.
For ex : If your mother invests this amount in bank FD then interest on FDs is a taxable income.
I am thankful for my help. I salute to your knowledge.
I am thankful for help. I salute to you.
I pay income tax regular as a private employee, Can i get 5 LAC as a gift from my NRI brother as a cheque from his NRI account ?
Dear Suraj..Yes, you can and it would be treated as a Tax-exempt transaction. Suggest you to kindly disclose it under ‘Exempt income’ section in Income Tax Return form while filing your taxes.
Hi Shreekanth
Senior citizen less than 80 year having only income of FD interest of Rs.4 Lakhs.
What are the standard deduction and exemption she can claim while filing returns.
Thanks
Dear Anil,
You may kindly go through below articles :
* Income Tax Deductions List FY 2018-19 | List of important Income Tax Exemptions for AY 2019-20
* Rs 40,000 Standard Deduction from FY 2018-19 | Does it really benefit the Salaried?
Hi,
Lets consider this scenario below:
A father who owns a property (wanted to give his property to a charity trust) knowing this the one of the daughter takes him and get the registration done.
Father forgot about the signatures – and wanted to give this property to charity trust.-> when the EC was taken with the katha no., it was still reflecting on Father’s name.
hence he gift deeds his property to charity trust after paying the tax amount and got it registered under the trust name (EC reflects from fathers name to Trust)
now, the younger daughter claims that she has a EC on her name and tax has been paid on that katha no.
Question to be cleared:
It is evident that the property is now on trust name as its shows on EC – but how come the daughter claims that she has EC and katha on her name
on what scenarios could this happen (Im guess the address being incorrect in daughter ‘s case).
If it is true( i.e address being incorrect for the katha )
Ques 1:ARE there any legal obligations for trust to face??
Ques 2: If it is not true then on wt scenarios would that have happened ???
Ques 3: and why would the name of the daughter not reflect on EC now??
your answer would be highly appreciated.
Dear Murali,
May I know, what do you mean by – ‘Father forgot about the signatures..’??
Is this an ancestral property or self-acquired one by him?
Have you checked the link Title Deeds and Title flow in EC?
Hi Sreekanth,
Since his retirement, my father has income only from bank FDs and post office schemes, which is about 3 lacs a year. On their wedding anniversary, he wants to gift Rs. 10 Lacs to my mother, who is also retired but files her own ITR. She may invest the money in a FD, buy jewelry or spend it as her own wish. My questions are;
1. If he gifts the money to her by a/c payee cheque, will this transaction be reported by the bank as High value transaction and hence will it attract scrutiny from IT department?
2. How much amount one can withdraw in a financial year from his Savings Bank account without being reported to tax authorities in India?
3. Since nature of transaction is gift from relative, I believe, there is no tax payable on the amount received. But do they need to do “gift deed” since amount is high?
4. Do they (both father & mother) have to report this transaction in their next year’s ITR? If yes, how should they do it? I understand, my mother has to show it as exempt income, but how does my father would report this transaction?
Thank you for your valuable guidance.
Dear Vai,
1 – If the transaction is done through cheque/online transfer, nothing to worry about. But, it is advisable that your mother reports this income in her ITR as an Exempted Income.
2 – No limit
3 – Yes, it is a gift and tax-exempted. Gift deed is not mandatory.
4 – There is no need to report about the Gift transaction by your father. However, if your mother invests this gift amount in say FD then any taxable income has to be reported by your father in his ITR and he has to pay taxes on such income.
I gifted my parents who are senior citizen Rs.20,00,000/-.
I opened a FD with bank in joint name with my parents and me.
What will be the scenario after their death?
Is the amount automatically transfer to my name and the interest is taxable to me thereafter?
Is any amount should be shown in the ITR return form while filing returns?
Dear Anil,
The gift transaction is tax-exempt.
If the FD is joint names and your parents are primary holders then interest income is taxable in their hands.
On unfortunate event, you will be the sole holder of the deposit and the interest income is taxable in your hands.
Related articles :
* Nominee Vs Legal Heir : Who will inherit (or) own your Assets? | Importance of WILL
* Income Tax Return of Deceased person | How to file ITR for the deceased as a Legal Heir?
Hi Sree,
Your blog is really insightful and a great place for learning. I have a similar query but looking forward for a more clear and concrete guidance.
We (dad, mom, bro, sis) sold our house this year. 1%tds deducted. Each of them (dad, mom, bro) gave a share of their amount to me to purchase a new property in my name.
I want to know how much tax my family members have to pay for this amount and how I have to pay or if not, can I pay on their behalf on the total money received as the money is with me.
Dear Ananiah,
The amounts given by your parents and brother can be treated as Gifts to you and they are tax-exempt.
If you are not going to re-invest in any new property then all four of you have to pay taxes on Capital gains as per your ownership share in the property.
In case, you are re-investing the gains in a new residential property then you can claim exemption (provided the gains are Long term gains).
Suggest you to kindly go through below articles, also consult a CA in this matter;
* How to save Capital Gains Tax on Sale of Land / House Property?
* Long Term Capital Gain Exemptions on Sale of Property & Recent Court Judgments
* Checklist of Important Property Documents in India | Legal Checklist for Property Purchase
I own a property in bangalore (property in my name). Im active trustee of a charitable trust.
I want to give the property to trust – is there a way to avoid paying stamp duty. (I’ve paid the tax till date)
Please suggest
Dear Murali,
If you write a WILL and give it to the Trust then you can avoid paying Stamp duty.
Also, stamp duty is State subject and varies from state to state .
In case, you Gift it then you have to pay stamp and registration fees.
Suggest you to kindly consult a lawyer/CA.
Hi Sreekanth
A wife purchased a land in 2016 say in 1 lakh and gifted it to her husband under a gift deed which contains the set forth value and market value of land. MV say 20 Lakh clearly mentioned in deed. Now they are separate,divorced and deed is registered. So husband will show the land in his books on a value of 20 lakh. So is there any tax liability for wife or husband on difference of 19 lakh now or later?
P-1 Mentioning MV in deed is right or wrong?
P-2 Any tax liability on difference for any one or he can easily a show a land of 1 lakh as 20 lakh without any tax liability?
Regards
Abhishek
Dear Abhishek,
May I know the gift deed registered with which value? The stamp duty/registration charges are paid on which amount? (Rs 1 lakh or Rs 20 lakh or some other amount)??
Hi Sreekanth,
thanks for this nice and brief article, it already helped a lot.
I have a small scenario and I hope you would provide clarifications:
Scenario:
Husband, salaried professional, receives salary after TDS, as usual, and regularly returns IT in time.
Wife, a doctor, runs her own clinic, also returns IT regularly.
A car is bought in the name of the Doctor (“Wife”), but the Husband pays for it from his account.
Throughout the year though, the petrol expenses are borne by the doctor and she wants to claim tax exemption on these fuel expenses.
Possible?
if yes, which all documents the doctor (wife) needs to share with the IT department?
Regards,
Seshadri
Dear Seshadri,
Suggest you to kindly consult a CA.
A friend wana gift another’s friend a car worth 15 lakhs without any occasion …. will the gift be taxable to anyone ?
Dear Sahil,
No tax is applicable.
“If you receive car as a gift from a relative or non-relative, there will not be any tax on it as ‘car’ is not listed in the prescribed list of movable properties as per the IT Act.”
I want to gift my biological brother some money who has been adopted by my grand fathers brother. Will it be taxable at his hand.
Dear Mahesh,
This is a tricky question and I am not 100% sure on this.
Kindly consult a CA.
Gift from from father’s brother to his nephew and gift from nephew to his father’s brother , do they fall in ‘Relative’ Category as per Income tax rules? Actually gift to brother falls in ‘Relative’ Category. Thanks.
Dear Mohan,
A gift received by an individual from his spouse, or from his brother or sister, or from the spouse’s brother or sister, parents, or from any lineal ascendant or descendant of oneself or one’s spouse would normally be fully tax-exempt.
In the said scenario, I think gifts are taxable and do not fall under the definition of ‘relative’ category.
If i get 10 lakh rupee [in the case of account holder(family member) dies and i m a nominee] as a nominee in bank account so will i have to pay tax
Dear Vikas,
Kindly go through this article : Nominee Vs Legal Heir : Who will inherit (or) own your Assets? | Importance of WILL
Dear friends,
i am using icici salary account, my monthly salary is less than 12000 only ,so did not file any tax.
one of my friend doing business and every month he used to transfer some amount to my account through online only ( NEFT, IMPS) by this way my yearly credit exceeds more than 10 to 15 lakhs.
Now my doubt is will it be a problem for me .please clarify .
thanks in advance.
S.Raja
Suppose a friend Mr A gifts Mr B immovable property in 2010 in Mumbai for free with no consideration.
How shall tax be computed on it for Mr A & Mr B and at what rate.
Also now after gift received in 2010 by Mr B , he sold the same property in 2017 how will tax be calculated and at what rate. Will it be STCG or LTCG ? Further how can Mr B save tax on gains earned.
Thanx in advance.
Dear Nisarg .. The gift is not a tax-free one as it has happened between two friends and not relatives.
The receiver of the gift should have paid required taxes in 2010 itself.
Kindly consult a CA.
Sir
I received rupees 5 lakh from my father in August 2015 and I deposited same amount in my bank account. He was ill at that time and in April 2016 he died. He use to file income tax return till year 2012. After that his health issue started.
Should I disclose this in Income tax?
Dear Ali ..You can consider this as a gift amount ad it is tax-exempt.