Isha Ambani, the daughter of Indian business magnate Mukesh Ambani, was married this December to Anand Piramal. While everyone showered the couple with love, blessings and gifts, the new house Gulita that Isha Ambani is moving into, is a gift from Piramal’s parents. The Piramals, who have interests in real estate and pharma, bought the property, previously owned by Hindustan Unilever, at a reported price of $62 million in 2012.
In India, we express our love and affection through gifts. We often hear of cars, Jewellery being gifted and homes being given to family members. But do these gifts turn taxable after a limit? Do your elders need to pay gift tax before presenting them?
GIFT TAX: The tax levied on the gifts that you have received in money or its worth and which is over and above a certain set limit by the Indian law is known as gift tax. Income tax on gifts helps regulate the gives which is given to you by a person who is not a close relative as per the definition of Income Tax Law of India. These gifts include tangible, intangible, movable and immovable assets which can be given voluntarily and without considering it in money or it’s worth. There are, however, some gifts which are exempt from taxes.
|Category I||Sum of money (gift in cash/cheque/draft) without consideration||Aggregate money received exceeding Rs. 50,000/-||Whole aggregate money is taxable|
|Category II||Immovable property without consideration||Immovable property received and SDV exceeds Rs. 50,000||Stamp duty value is taxable|
|Category III||Immovable property with consideration||A.Y. 2018-19
SDV > consideration & (SDV- Consideration) >50,000
SDV >105% of consideration & (SDV-Consideration) >50,000
|(SDV- Consideration) is taxable|
|Category IV||Movable property without consideration||Aggregate FMV of movable property exceeds Rs. 50,000||Whole aggregate FMV is taxable|
|Category V||Movable property with consideration||Aggregate
(FMV- consideration) > 50,000
|(Aggregate FMV – Consideration) is taxable|
1. Any sum of money received (as gift) without consideration up to Rs. 50000/- in one year is not taxable.
2. Following receipts without consideration are exempt
a) Gifts received from ant relative
b) Gifts received on occasion of marriage of an individual
c) Gifts received under a will or by way of inheritance
d) Gifts received in contemplation of death of payer
e) Gifts received from local authority as defined in explanation to section 10(20)
f) Gifts received from educational or medical institution or fund etc. referred to u/s 10(23C)
g) Gifts received by any fund/ trust/ institution/ university/ other educational institution /hospital/ other medical institution referred to in sub-clause (iv) or (v) or (vi) or (via) of clause (23C) of section 10
h) Gift received by way of transactions not regarded as transfer under section 47(i)/ (iv)/(v)/(vi)/ (via)/ (viaa)/(vib)/(vic)/(vicb)/(vid)/(vii)
i) Gifts received from an individual by a trust created or established solely for the benefit of relative of the individual.
1. Relatives: As per the Income tax act, the sum of money received from any of your relatives are fully exempt from tax. Here the “relatives” term defines by the Income Tax act as follows :
2. Immovable property
3. Only single transaction is considered for calculating threshold limit of Rs.50000/- in the case of immovable property received as a gift. Where as in other cases (cash or movable property) all transactions in financial year are taken into consideration for calculating threshold limit of Rs.50000/-.
4. Stamp Duty Value means the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property.