ITR filing: Know about how gifts are taxed and when they are exempted from income tax
Everyone loves gifts, especially when received, but most taxpayers don’t know that they may attract taxes unless they fall under an exempted category. A taxpayer is liable to fully disclose gifts received during the financial year when filing an income tax return (ITR) and taxes should be paid on them to avoid any litigation disputes or penalties.
Gift from relatives
Gifts received from close relatives like father, mother, brother, sister and spouse is exempt from income-tax. The taxpayers are, however, still required to disclose the exempt gift amount under the schedule ‘Exempt Income’ in the ITR, Yeeshu Sehgal, Head of Tax Markets, AKM Global told CNBC-TV18.com
Gift from the employer
In India, almost every employer offers gifts to their employees on various occasions during the year. As per the Income Tax Act, if an employer offers any gift voucher in kind or cash amounting to less than Rs 5,000 during the financial year, then it is wholly exempt. However, if the amount of gift exceeds Rs 5,000, then the whole amount is treated as part of salary and taxed as a ‘perquisite’, according to one’s tax slab.
Gifts received from friends and others
Gifts received from friends will be treated as ‘income from other sources’ and taxed accordingly. Tax is to be paid in case aggregate of gifts received during a year exceeds Rs. 50,000 in a year and the same need to be mentioned in ITR. There is no tax liability as long as gifts received are within the threshold of Rs 50,000 a year, Sehgal said.
