People are given expensive gifts ranging from money to relatives and friends on marriage, birthday and any other occasion. In such a situation, confusion remains in the minds of the people whether they will have to pay tax on the gift received or not.
Gifts are generally divided into three categories.
Monetary Gifts - Cash, Cheque, Draft, UPI & Bank Transfer
Real estate - land, house, shop, flat and commercial property
Movable assets – Paintings, Shares, Bonds, Coins, jewelry, etc.
When is a gift not taxed?
Gifts received on marriage are tax-free. No tax is charged on this by the government. However, this rule does not apply to gifts given by the parents and relatives of the bride and groom. Monetary gifts and property received under a will are also fully exempt from tax.
What is the tax treatment of income from gifts?
In some cases, income from gifts is included in your income. For example, if you have made two lakh rupees in the name of your child or spouse and he has invested it in a bank FD, then the amount from that will be included in your income.
Similarly, if you have transferred a property to your heir and it is earning any kind of rental income, then it will be added to your taxable income.
If there is a loss on the gift, can I claim it in income tax?
For example, you have given five lakh rupees to your spouse to invest in his business by check and there is a loss of two lakh rupees in his business, then you claim about one lakh rupees in your ITR.
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