Diwali gifts: Taxable or tax-free? Decoding the rules for a hassle-free festival
Diwali is steeped in the belief that it ushers in good fortune and prosperity. There is an inherent and old tradition of giving and sending gifts to loved ones. Some love to shower their dear ones with gifts of gold and silver while some adopt the alternative route of gifting shares, antique pieces, or expensive artefacts collected over a period.
Though gifts are typically seen as tokens of goodwill and gratitude, numerous countries have tax implications linked to gift transactions. The precise guidelines and laws governing gift taxation can differ according to the jurisdiction, yet certain overarching principles are generally applicable. Gifts received from relatives during Diwali are entirely exempt from taxation under the Income Tax Act, whereas gifts from non-relatives exceeding ₹50,000 are subject to taxation and categorized as “Income from other sources".
Here’s a concise overview of the Diwali gift tax regulations: Your definition of “relatives" may not be synonymous with how taxmen define this term. The term “specified relatives" eligible for tax exemption encompasses: When it comes to tax assessment, the value of gifts is generally established based on the fair market value of the given property at the moment of transfer. This evaluation can be intricate, particularly when dealing with non-monetary assets like real estate or artwork.
Gift taxation encompasses the acquisition of the following assets: Gifts of assets not included in the aforementioned list, even if they surpass ₹50,000, will remain exempt from taxation. However, the receipt of cash or immovable property valued at more than ₹50,000 will also be subject to taxation. A lot depends on whether you received gifts from relatives or those termed as
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