Tax on Gift Received by an Individual or a HUF – Frequently Asked Questions

Tax on Gift Received by an Individual or a HUF – Frequently Asked Questions

Discover the tax implications of receiving gifts in India. Learn about the taxability of monetary gifts, immovable properties, and movable properties for individuals and HUFs. Get answers to common FAQs

Is the receipt of monetary gifts by an individual or Hindu Undivided Family (HUF) taxable?

Yes, under the Income Tax Act of 1961, monetary gifts received by an individual or HUF are taxable.

Is there a limit to the amount of gifts that an individual or HUF can receive without being taxed?

Yes, gifts worth up to Rs. 50,000 are tax-free in a fiscal year. Gifts in excess of this amount are taxed.

Is there any circumstance in which a sum of money received without consideration, namely, a monetary gift received by an individual or HUF, is not taxed?

Yes, there are some circumstances in which monetary gifts received without consideration are not taxed. Gifts obtained on the occasion of marriage, gifts received under a will or by form of inheritance, gifts received in anticipation of the donor’s death, or gifts received from any municipal authority or charitable institution are examples of these.

Gifts provided by family members are tax-free. Who will be regarded relatives for the purposes of this exemption?

For the purposes of claiming exemption, the term “relative” covers the spouse, siblings, siblings of the spouse, lineal ascendants or descendants, and their spouses.

Are there any additional circumstances where monetary donations received by an individual are not subject to taxation?

Yes, monetary presents received on events such as birthdays, anniversaries, or other ceremonial occasions are not taxed if the total amount of gifts received does not exceed Rs. 50,000 in a fiscal year.

Are monetary gifts from friend’s tax deductible?

Yes, monetary gifts from friends are taxed if the total amount of gifts received during the year exceeds Rs. 50,000.

Are monetary gifts received from overseas taxed?

Yes, monetary gifts from overseas are taxed in India if the total amount of the presents received during the year exceeds Rs. 50,000. However, particular provisions based on tax treaties between India and the relevant foreign country may apply.

An individual received various cash gifts from friends, none of which above Rs. 50,000, but the total of the gifts received during the year topped Rs. 50,000. In such a circumstance, how would the taxation be handled?

In this situation, the total amount of gifts received will be taxed if it exceeds Rs. 50,000. To evaluate taxability, the individual must consider the entire value of gifts received during the year.

If an individual or HUF’s total value of gifts received during the year exceeds Rs. 50,000, will the complete amount of presents be subject to tax or simply the amount in excess of Rs. 50,000?

If the total value of gifts received during the year exceeds Rs. 50,000, only the excess amount will be subject to tax. Gifts of up to Rs. 50,000 are tax-free.

Is it possible that the value of immovable property obtained by an individual or HUF without consideration (as a gift) is not taxed?

Yes, in some situations, the value of immovable property obtained by an individual or HUF without consideration is not taxed. Gifts obtained on the occasion of marriage, gifts received under a will or by way of inheritance, gifts received in anticipation of the donor’s death, or gifts received from any municipal authority or charitable institution are examples of these.

A person received three properties as a present from a friend. The value of none of the properties topped Rs. 50,000, but the combined worth of these three assets did. In this instance, how will the gift be taxed?

In this condition, the gift will be taxed because the value of each individual property is less than Rs. 50,000 and the total value of all three properties exceeds Rs. 50,000. To determine taxability, the individual must examine the total aggregate value of gifts received during the year.

Are immovable properties given as a gift from friends taxed?

Yes, if the total value of presents received during the year exceeds Rs. 50,000, immovable properties acquired as a gift from friends are taxable. The value of the gift is determined by taking the stamp duty value or the fair market value (whichever is greater).

A friend gave an individual a flat as a gift. The flat’s stamp duty value is Rs. 88,000. In this instance, will the complete value of the gifted property be taxed, or will only the value in excess of Rs. 50,000 be taxed?

In this scenario, because the stamp duty value of the flat exceeds Rs. 50,000, the full value of the gifted property will be taxed. In the case of immovable property, the stamp duty value is used to determine the value of the gift.

Is there any taxability if an immovable property is purchased for less than its stamp duty value?

Yes, if an immovable property is purchased for less than its stamp duty value, the difference (if there is any) may be considered as income from other sources and taxed.

Is there any occurrence in which an immovable property acquired by an individual or HUF for less than its stamp duty value is not taxed?

No, if an individual or HUF receives an immovable property for less than the stamp duty value, the difference between the stamp duty value and the real consideration (if any) is normally taxed as income from other sources.

Are moveable property gifts received by an individual or HUF taxed?

Yes, moveable property gifts received by an individual or HUF are taxed if the total value of gifts received throughout the year exceeds Rs. 50,000. The fair market value of the moveable property is used to calculate the value of the gift.

A person received jewellery as a gift from his friends. The entire worth of jewellery received as a gift from all of my friends over the year was Rs. 88,000. In this instance, how will the gift be taxed?

Because the total amount of jewellery received during the year exceeds Rs. 50,000 in this scenario, the entire value of the gift (Rs. 88,000) would be taxed. In the case of movable property, the fair market value of the jewellery is used to determine the value of the present.

Please refer to the table below for a summary of taxation:

Type of GiftTax Treatment if Aggregate Value > Rs. 50,000
Monetary giftsTaxable
Immovable propertiesTaxable
Movable propertiesTaxable
Gifts received on specific occasionsNot taxable if value ≤ Rs. 50,000
Gifts received from relativesNot taxable
Gifts received on certain occasionsNot taxable if value ≤ Rs. 50,000
Gifts received for treatment/deathNot taxable if received from family
Gifts received without considerationNot taxable in specific cases
Gifts received from abroadTaxable if aggregate value > Rs. 50,000

Is a minor child’s gift taxable?

Yes, the gifts received by a minor child are taxable.

Can gifts received by an individual or HUF be deducted when calculating taxable income?

Gifts received by a person or HUF are not deductible when calculating taxable income. They are recognized as taxable income in the recipient’s hands.

Are gifts from non-relatives tax-free if the value is less than Rs. 50,000?

No, gifts from non-relatives are taxable regardless of their monetary worth. The Rs. 50,000 exemption limit applies solely to presents received on special occasions or from specific relatives.

Are gifts made to charitable organizations or trusts taxable?

Yes, unless specifically exempted under the provisions of the Income Tax Act, gifts received by charitable institutions or trusts are normally taxable.

Is it necessary to record gifts received?

Yes, if the total value of gifts received during the year exceeds Rs. 50,000, such presents must be disclosed while filing the income tax return. The specifics of the presents should be provided in the format specified.

Disclaimer: The content in this blog is given for general information purposes only and should not be construed as professional tax or legal advice. It is best to consult a certified tax professional or refer to the Income Tax Act and relevant guidelines for particular advice regarding your circumstances.

Contact us for professional guidance: info@taxvic.com
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