In this blog post I will be writing about the Income Tax rules related to the Gifts received by a person. There is many rules on receiving the Gifts based on the gifts nature and from whom the person has received the gift. The Income Tax Act 1961 has made change to the rules in 1st April 2006. We will look into the recent rules in this blog.
Not only the income, if a person receives a gift, if the value of the gift is exceeding the certain limit then he must add it in his income and pay the income tax. There are certain exceptions on declaring the gifts as income. This blog explains it in detail. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.
Income Tax Exemption on Gifts
Gifts received From Relatives
As per the Income tax act, the Gifts received from any of your relatives are fully exempt from tax. Whether you are received the gifts as Cash, Cheque or any goods. You are not liable to pay the tax for these gifts. Here the “relatives” term defines by the Income Tax act as follows :
- Spouse of the individual
- Brother or sister of the individual
- Brother or sister of the spouse of the individual
- Brother or sister of either of the parents of the individual
- Any lineal ascendant or descendant of the individual
- Any lineal ascendant or descendant of the spouse of the individual,Spouse of the person referred to in clauses (ii) to (vi).
For example if you are receiving gift of Rs.100000 from your uncle ( your mother’s brother), it is fully exempt from the Tax. Whenever you get the gifts please apply the relations in the above list to ascertain whether you are liable to pay any tax for the received gift.
Gifts received From Non-Relatives
Here non-relatives means anyone who doesn’t come under the above mentioned relation for you. In this case you are tax exempt up to maximum of Rs.50000 for a financial year. If you receive the gift worth more than Rs.50000, you are liable to pay the tax what ever you received excess of the limit. This rule applies when the gift is a sum of money, whether in cash, by way of cheque, bank draft or any articles which is value more than the Rs.50000.
For example you are receiving a gift of Company Shares from one of your team mate in your company or when you are receiving a gift of Rs.100000 (cheque) for the best performing in your company (not a bonus), Rs.50000 is liable to pay tax.
Marriage Gifts
One very happy feature of the provision of taxation of gifts is that any gift received from any person on the occasion of the marriage of the gift’s recipient would not be liable to income tax. There is no monetary limit attached to this exemption. Note that, if you receive any gifts at the time of engagement or the marriage anniversary if liable to pay the tax.
Special Tax Exempt gifts
The following list of gifts are fully exempted from Tax whether the it is received as Cash, or any other form of the material doesn’t affect the exemption.
- 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
Summary
I hope this blog provides you enough information how to calculate the tax for your gifts. So, when ever you are receviving the gifts, please be careful if you are liable to pay the tax. Thanks for reading this post!!!
If you have any doubts, please post in the comments area so that I can answers all the questions.
Subscribe to our future articles here.
November 5, 2011 at 10:31 am
Can my father gift more than 50000 to my HUF? If yes, will it be taxable?
Also, if my NRI relative gifts 1 lakh to my HUF will the amount be taxable? Aren’t gifts from nri’s non taxable?
November 7, 2011 at 4:05 am
hi, i am an NRI. my husband wants to send money to my father, who is a senior citizen getting pension. would this be tax liable?
November 7, 2011 at 6:56 am
Hi Krishna.
I have a question.
My brother is an NRI. He would be gifting me a sum of 2 crores. Will it have to be done by an NRE account or could the transfer be effected from his local account to my savings bank account.
If it must be transferred only from an NRE account, can a newly opened NRE account be credited with such a huge sum of money from his local bank account abroad? or will that be a problem?
Is a Gift deed required in this case?
November 10, 2011 at 7:25 am
Hello Sir,
I am in UK and would like to send money to india may be 3 lakhs every month. How can i manage this with out Tax implications.
1. Can I send as gift of 3 lakhs to my wifes brother
2. Can I send gift to my own brother or my father/Mother
Kindly let me know any alternatives to avoid tax when i transfer from UK to India.
Thanks,
Shiva
November 10, 2011 at 12:15 pm
Hello Krishna,
My father’s brother (NRI) wishes to give me a gift of INR 5 Lacs. Also, I am planning to take a loan of another 5 Lacs from him.
What would be the income tax implications for me as well as him if he transfer money from his
1. Account in foreign country.
2. NRE account in India.
3. NRO account in india.
Thanks in advance,
Emmanuval.
November 11, 2011 at 5:22 pm
Hi
My brother in India wants to pay me huge sum (1.5 Cr) for my part of the property share as he received the entire property as a gift deed from my dad. Is there a tax liability for me to receive this money from him? Are there any legal precautions that I need to do before we receive this money?
Thanks in advance
November 15, 2011 at 11:13 pm
I WANT FULL INFORMATION ABOUT CAPITAL GAINS. IF I PURCHASED BUILDING IN 2010 @ 22 LACS NOW I SOLD TO 45 LACS. NW WHAT IS THE TAX RATE. HOW TO REDUCE TAX ANDWANT EXEMPTIONS & DEDUCTIONS.
THANKING YOU
November 20, 2011 at 12:55 am
Can my brother’s wife give a property as gift to me….will it be taxable….please explain…do not quote the laws mentioned in sec56
November 22, 2011 at 9:54 am
If Father is NRI and Daughter is NRI. Father gives from his NRI account gift of say one million to the daughter as gift and is placed in her NRI account. Will there be any need for gift deed. What are implication in this case
November 23, 2011 at 1:51 am
Thank You Krishna for such a nice and informative article and for in very understandable language .
My query is regarding the gifts from non-relative,as you told it is fully exempted if in kind, is not there any limit to this and if no can you please site the respective section of the I.Tax Act,please and oblige?
Thanking You and Wishing You very Long and Healthy Life ofcourse with a peace of Mind too to write even great articles to enlighten your readers !
Subhash Jagtap,subhash_mj@rediffmail.com
November 24, 2011 at 3:16 am
DEAR SIR,
I WANT TO KNOW IF :-
KARTA OF HUF PAID A GIFT BY WAY OF CASH OR CHEQUE OF RS 100000 TO HER SPOUSE/CHILD. IS IT TAX FREE OR NOT….
THANKING U
November 26, 2011 at 7:55 am
dear sir, i m a non resident n earning abroad for last 10yrs.i have kept rs 8lakh in mis post office for my two chidrens,they are student,20yrs age,single status,& rs 10 lakh in bank fd,interest income of childrens are within taxable limits &given 15G form.all money transferred from nre ac. Sir is there any tax liability to my children that i want to know. thanks. sincerely dr bn jha.
November 26, 2011 at 10:26 pm
excellent ones very useful in a complicated taxing structure in india where even the auditors are not aware of the happenings
November 28, 2011 at 5:19 am
Dear Sir,
My wife is a housewife and received around Rs.50 lakh from her paternal uncle lived in UK through 5-6 transactions. We have waived our housing loan of Rs.10 lakh and helped her parents and other relatives Rs.12 lakh. Balance we have invested in various schemes and alos made some FD in bank as per uncle’s suggestion. Will she be taxable? If yes, how much she has to pay? How much she would get the exemption?
Also please inform if we want to return money to him in UK, what is the upper limit we can send?
Thanking you.
December 3, 2011 at 7:35 am
what if i got any car from any of ma friend or non-relatives..what should be the tax liability and all for me….
December 3, 2011 at 1:51 pm
Is there any TAX liability if a friend of mine loan me some money for the car i am planning to buy so that i don’t have to take loan from Bank and pay heavy interest and then i pay the amount back to my friend over period of time,
December 4, 2011 at 5:16 am
within what time frame the gift deed is to be made after receiving the gift
December 4, 2011 at 7:32 am
sir
i wish to knw that , if my brother an NRI, employed in dubai sends a gift of rs. 3lakhs to me in my indian saving account , will it be necessary for me to show it in ITR as income and then claim exemption and if not so…then how i should represent it..
plz clarify me in both cases
December 4, 2011 at 2:55 pm
I am an NRI/ If I have inhereted MFs, SHares and cash from my mother who died in India. I am supposed to pay tax on it.
December 5, 2011 at 5:13 am
We want to Know can we are received Gift as H.U.F. ( KARTA) with our brother’s wife Rs. 3 Lac. and it is tax free ?
December 6, 2011 at 12:46 am
if i gift rs 10,00,000/- to my wife, what are tax implications for her? what are the tax implication on me with regard to her income (interest, capital gain) arising out of this gift amount?
December 9, 2011 at 12:29 am
I sold a house at Gurgaon in 2009, and invested entire amount of Rs 40 lakh in a property at Navi Mumbai which is jointly held in the names of my son(NRI) and my wife(50:50) as my wife’s contribution. I have paid i/tax on this amount. there is a written agreement between me and my wife that this amount of Rs 40 lakh is given as a loan and that she has to return this amount through rent value she recieves from the rental in succeding years. my wife is a housewife and she has no other source of income. the agrrement is on a plain paper. have i to register this agreement? what are her and mine tax liabilities?
December 9, 2011 at 10:17 pm
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December 11, 2011 at 3:31 am
sir
Please let me know that what is the exemption of gift received from non relatives
December 11, 2011 at 9:09 am
I have inherited in accordance of her Will from my mother when she died in November 2009. Do I have to pay tax on her behalf for the remaining period of the income-tax year i.e. till March 2010 on this inheritance?
December 13, 2011 at 12:35 am
Sir,
I have give 8 lakhs as gift/interest free loan to my sister-in-law for purhasing plot.
December 15, 2011 at 2:18 am
Dear Sir,
I am a director of a private limited company, of which there are three more directors. All the directors are also the shareholders with a collective holding of 100%. We wish to sell 100% shares of the company to a third party. And all the other 3 shareholders wish to give me the proceeds by way of gift or any other way in which i will have to pay minimum or no tax. How can we proceed with such transaction and what will be the tax implications for individual shareholders. A quick response in this regard will be highly appreciated.
December 15, 2011 at 7:05 pm
I am an Indian citizen. Recently I have become an NRI and am residing in USA. What are the advantages and disadvantages of becoming a US citizen?
December 16, 2011 at 5:20 am
My father recently made an agreement to sell his share of ancestral property and recieved an advance of 2.25 crores. Since, he has given me a gift of 1 crore 95 laks. A gift deed has now been registered with a notary. We are also both NRI’s.
Can you please inform me of the tax implcations of either my father or myself. I have received conflicting information so far and am looking for clarification. Initially I was told there would be no tax to pay, but now have also been informed that 30% would be required under income tax.
Could you please clarify the situation.
Thank you.
December 16, 2011 at 11:49 pm
Dear Sir,
I have inherited wealth from my father-in-law to a tune of Rs. 10/- lakhs in cash after his death. My wife is the only daughter to him and he was staying with us along with his wife. Is the amount chargeable to tax in my income.
Request you to help me out.
Regards,
Abdul Rahman
December 17, 2011 at 12:00 am
Dear Sir,
I have inherited wealth from my father-in-law to a tune of Rs. 10/- lakhs in cash after his death. My wife is the only daughter to him and he was staying with us along with his wife. Is the amount chargeable to tax in my income.
Request you to help me out.
Regards,
Abdul Rahman
December 17, 2011 at 8:27 am
I have not received any answer to my query dated December 11, and December 15, 2011.
Queries sent after me have been replied to. I am awaiting reply for my queries.
Thanks
December 17, 2011 at 8:52 pm
plz…someone answer my query dated december 4th.
thanks.
December 21, 2011 at 9:50 pm
Dear Sir,
I recd.flat against gift deed from my mother in law, the value of flat not mentioned in the deed. I paid stamp duty of Rs.35000/- & I want to show the assets in my income tax return alongwith salary recd. Rs.16000/- per month, so please guide me how can show the both in ITR.
December 26, 2011 at 2:35 am
Hi,
My wife is a housewife and she has her PAN no.
I want to give my wife a regular amount every month.
And, she wants to invest that money in stock market.
Now, I want to know if she earns some money from that investment. What are the tax implications?
As I understand, the money I will give her as a gift will be exempted from tax. And, if she’s earning from that money, that money should be below the exemption limit of 1.8 lacs to get rid of tax.
Please let me know. Thanks.
Regards,
Nishant
December 28, 2011 at 4:08 pm
Dear Sir,
I read thru your resposes and was impressed by your patient and informative responses.
Please respond to my query as I could not find any queries/response similar to mine.
I am resident of Bangalore. In year dec-2004, I had given money INR 12 lakhs Cash to my father-in-law (FIL) to purchase an agricultural land (1 Acre 05 Guntas) which was in Govt. of Karnataka notified Yellow Zone (i.e. possible to convert land to residential purpose) in bangalore city municipal limits, along with him purchasing few more acres of land. As I was (a.) Non-Agriculturist and (b.) Working in UK on short assignment from my S/W company at that point, the property was registered in my Father-in-Law’s name.
We had made an Agreement (non-registered) between me and my FIL on Stamp Paper about that time – that my father in law was purchasing the above land in his name on my behalf for the above said reasons. Once approved plots are made I would take the monetary benefit from the sale of plots.
Now we have got the land converted and formed Residential plots with approval from Bangalore Development Authority (BDA). We have started selling the plots AS & WHEN Needed and want to get the money in My Name Legally.
Please guide me as to
1. how I can do that and what kind of Procedure/Deed (Registered Gift Deed/ Other Deed?) From FIL to Myself with minimal or no tax implications.
2. Or should my FIL Transfer to My Wife thru Gift Deed and then she can transfer thru Gift Deed to me.
3. If no other options available – Can I go ahead and get money transfered to my account from his account after the sale of property each time and I Pay Taxes.
4. Are any above options possible OR You can suggest option(s)?
5. In Each of Above Options or any Other Option You suggest what will be Tax Implication To Me.
Appreciate your Response ASAP.
Regards
Rajkumar
December 29, 2011 at 4:39 am
Hello Sir
Really impressed by the way of your dealing to queries
1. I am a resident of Delhi and my Cousin Sister ( Mama’s daughter {Mrother’s Brother Daughter) from UK wants to transfer some money into my account on my Birthday as a gift. Please let me know how much amount can be transferred so as we both are not liable for any tax liability. ? And do i need to get any Gift Deed registered for the same, if yes then Stamp paper of how much amount is required.
2. In few of your posts above I read that there is no tax liability on gift(any amount) that is being given by an NRI friend or relative. Is this true ?. And as per the current Gift tax rules we can take a gift less than equal to Rs 50,000/-, so is this rule valid specifically for gifts made within India only(No NRI transactions) .
3. Are there any specific rules( for Amount & Time Limit for return) for taking soft loans from Friends/ family/ relative from India and Abroad. And is there any specific time limit for paying back the soft loan as per I-Tax Rules.
4. How much amount can I take as a gift from my parents & real sister(married) on which no tax liability is there on donor or receiver.
5. If my parents gift me any property and later after some time I sell it. Who will have to pay tax on the income made from that property after selling. And in this case my parents and me both have to show the gift of immovable asset in ITR to be filed for that year?
6. My Grandfather passed away few months back and as per the WILL he had given full rights to sell his property to my Father & his 3 Brothers (4 Son’s of my Grand father. ) The Property is now sold and 4 shares have been distributed amongst them. So what are the tax liabilities to be taken care by my Father.
Hoping for an early response in the matter.
Thanking You in Anticipation.
January 2, 2012 at 12:04 pm
I am an NRI. I want to gift 2Lakh to my father-in-law to help him constructing his dwelling place. He is a farmer and does not pay tax. Will that amount be taxable for him? Many thanks for your answer, otherwise, I shall send the money to my wife, who can transfer back to her father, both tax free gift. Your blog is useful to me.
January 3, 2012 at 9:42 am
hello sir,
I thank you for the help you are providing to people .I am a marine engineer working on foreign going vessels.I try to maintain nri status of 183 days ouside india.I have an NRE account .I wish to buy a farm house in india.as per law I can buy immovable property other than farm house,agriculture land or land for plantation .will it be consider as gift to my father if pay for the farm house and get it registered into my fathers name or shall I transfer money (from NRE account) to my fathers account ( normal saving account)out of which he can purchase a farm house.
January 6, 2012 at 9:53 pm
I have deposited 10 lakhs in my wifes name. Interest is payable to my wife. Can I count this interest as income to my wife and submit
her tax return duly taking as exemption limit
January 6, 2012 at 9:56 pm
I have deposited 10 lakhs in my wifes name. Interest is payable to my wife. Can I count this interest as income to my wife and submit
her tax return duly taking as exemption limit I.e. rs 2.50.0000.
January 13, 2012 at 12:42 am
What will effect and at where in my income tax return if i gave gift to relative?
January 15, 2012 at 6:07 am
Sir,
(1) Receipt of Estate by the heir under the Will of the Deceased, will it attract any tax liability to be paid by the heir? And how it should be shown in the Income-tax Return of the heir?
(2) Income earned by the deceased after her death till the distribution of her estate under her Will to the heirs – how such income be treated in the Indian Income-tax? Does such income attract income-tax, if any, who should pay the tax and under whose Income-tax Return it should be shown and how?
Hope to receive an early reply. Thanks.
January 16, 2012 at 1:59 am
Sir,
My friend borrowed 2.5 lacs from her friend. She got it as a cheque in her name. Is there any problem depositing it? Since it is a loan, will it come under any income tax sections?
Thanks.
January 18, 2012 at 9:07 am
My mother gifted me Rs.2 lacs for purchasing a flat.
(i)What is the tax implications on me or my mother.
(ii)Whether the gift is exempted under IT act for either one.
(iii)whether Gift deed can be prepared on plain paper.
January 19, 2012 at 2:43 am
Hello sir,
Im mourya and im into import & export business and i have a friend in uganda he is into car business and he wanted to gift me a BMW car which is worth of 45 lakhs in INR . And if he send me as gift item do i have to pay any taxes in india . if so what will be taxes prices
January 20, 2012 at 9:08 am
Hi,
i live in the United States and send money (around Rs 2,00,000…) to my parents (1 lakh to my mom and 1 lakh to my dad) in India every month thru “money Gram” and they receive the money in the form of a cheque that doesn’t have my name. Now my question is: will my parents be required to pay tax as they don’t have any gift deed to show to IRS?if the answer is yes then how can they prove that its a gift from their daughter living in USA.Secondly, is there any limit to the amount sent per year.
January 23, 2012 at 6:24 am
Dear Sir/Madam,
Two years back, my father was alloted a plot by a government authority. Total cost of plot was 11 Lacs. While Applying for the plot the initial amount 1 Lac was deposited by Demad Draft and that Demand draft was issued from my account.
Later, on allotment of plot I transferred 10 Lacs to my father account through cheque. The demand draft of 10 Lacs was issued from my father’s account.
I have paid total 11 LAcs to my father. I have paid tax on that income.
I hope this amount will be tax exempted as it shoud come under “Any lineal ascendant or descendant of the individual” category.
Could you please answer to the following queries:
How to show the paid 10 lacs as gift?
How to show that paid initial amount 1 lac as gift.?
We have not made any deed for the gift. However, I have paid that amound by cheque.
Do we need to make gift deed.
January 23, 2012 at 6:25 am
Dear Sir/Madam,
THREE years back, my father was alloted a plot by a government authority. Total cost of plot was 11 Lacs. While Applying for the plot the initial amount 1 Lac was deposited by Demad Draft and that Demand draft was issued from my account.
Later, on allotment of plot I transferred 10 Lacs to my father account through cheque. The demand draft of 10 Lacs was issued from my father’s account.
I have paid total 11 LAcs to my father. I have paid tax on that income.
I hope this amount will be tax exempted as it shoud come under “Any lineal ascendant or descendant of the individual” category.
Could you please answer to the following queries:
How to show the paid 10 lacs as gift?
How to show that paid initial amount 1 lac as gift.?
We have not made any deed for the gift. However, I have paid that amound by cheque.
Do we need to make gift deed.
January 25, 2012 at 1:58 pm
Sir,
I paid Rs 2 lakh to my mother in cash.
So, I will be taxed on that money and since my mother comes under ‘Relative’ she is not supposed to show that as her income & won’t be taxed on that.
Am I Right?