Gift tax in India was regulated by the
Gift-tax Act which came into effect on 1st April, 1958 and is applicable in the entire country except in Jammu and Kashmir. As per the
Gift-tax Act of 1958, a gift in excess of Rs. 25,000 (cash, demand draft, check, online money transfer) received from anyone who is not your blood relative, is taxable.
Even if your best friend has just won a huge lottery and gifts you Rs. 30,000 in cash/draft/check, you'll have to declare pay a Gift-tax on it.
Exemptions
Gift-tax need not be paid if:
-
The gift was given by a blood relative, irrespective of the gift value.
- The value of the gift is less than Rs. 25,000.
- The gift money was in return of something. So if you receive Rs. 100,000 from someone and in turn you give her a designer dress, you need not pay Gift-tax on the money received. This transaction will be considered a purchase and is therefor exempt from Gift-tax.
- The gift was received on your wedding, irrespective of the gift value. But a gifts in excess of Rs. 25,000, received for any other occasion (birthday, anniversary, etc.) is taxable.
Procedures
There is no standard procedure to be followed for receiving a
taxable gift. When you file your returns, you should add the gift amount to your annual income under 'Income from other sources'. You'll then be taxed depending on your total taxable income. However, make sure that you:
Accept the gift in writing via a gift deed. The deed will mention the value of the gift and the names of the persons giving and receiving the gifts.
Sign the gift deed and get it signed by the person giving you the gift.
Register the gift deed by paying the requisite stamp duty.
