Taxability on Gifts, Rewards and Rewards Given to Sportsperson/Olympic Participants
TAX ON GIFTS IN INDIA:
In India, gift is exempted up to Rs. 50,000 and gifts from specific relatives such as parents, spouse and siblings are also exempted from tax. Other than specified before are taxable. Tax on gifts falls under the purview of Income Tax Act as there is no specific rule for tax on gifts are provided.
GIFTS THAT ARE EXEMPT FROM TAX:
1. Gift received up to Rs. 50,000 in a financial year is exempted.
2. If any person is receiving any movable or immovable property for insufficient consideration than differentiation of stamp duty value and consideration will be considered as a taxable gift.
3. Gifts from specified relatives is also exempted.
4. Gifts received in contemplation of marriage.
5. Gifts received under a will or inheritance.
6. Property received from local authority.
7. Property received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution.
8. Property received from a trust or institution.
DEFINITION of RELATIVE
2. His Spouse
3. Parents of the Individual
4. Parents of the Spouse.
5. Brother and Sister of Parents of the individual.
6. Brother and Sister of the Spouse of the Individual.
7. Children of the Individual and the spouse.
8. Lineal Ascendant and Lineal Descendant of the Individual.
9. Spouses of all the above mentioned people.
AWARDS AND THEIR TAX IMPLICATION:
If we talk about awards then it is tax free only if it is approved by government, but the reason of why the award is given, to whom it is given, whether the award is approved by government or not is also really important. There is list of certain awards which is tax free, this includes following:
THE RATE OF TAX:
Awards which are not approved by the government is liable to tax at the rate of 30% and is also applicable for cess which leads to rate of 31.2%.
DEDUCTIONS AND EXEMPTIONS ON INCOME FROM AWARDS AND PRIZES:
No deduction is applicable to winnings if they are taxable. So, the taxpayer will not be able to claim deduction under chapter VI A on the winnings which are taxable.
SECTION 10(17A) OF THE INCOME-TAX ACT, 1961 – AWARDS –CLARIFICATION ON TAXABILITY OF AWARDS FOR SPORTSMEN: