Gift is a voluntary transfer of property from one person (being the ‘Donor’) to another (being the ‘Donee’) where full value of consideration is not received in return.

 

Any sum of money or any property which is received without consideration or for inadequate consideration (in excess of Rs. 50,000) by any person shall be chargeable to tax in the hands of the of the Donee i.e. recipient of the Gift in the following manner in India under the head ‘Income from Other Sources’:

Points to Remember:

  • Currently, (subject to certain conditions) there is no Gift tax applicable in India. Several countries however, levy Gift tax on either the Donor or Donee. For E.g.: In the US, Gift is taxed in the hands of the Donor (person giving the Gift), subject to certain exceptions and deductions. In this regard, a NRI shall also have to keep in mind the tax implications and reporting requirements of giving / receiving Gifts in his / her country of Residence.

Frequently asked questions

Are there any exceptions to the above provisions in respect of any kind of Gifts?


The above provisions shall not apply to any sum of money or value of property received:

  • from any relative (refer FAQ below for meaning of relative); or
  • on the occasion of the marriage of the individual; or
  • under a Will or by way of inheritance; or
  • in contemplation of death of the payer or donor, as the case may be; or
  • from any local authority as specified in the Act; or
  • from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution specified in the Act




Who are the relatives covered for the purposes of the Gift provisions in the Act?


In case of Individual:

  • spouse of the individual;
  • brother or sister of the individual;
  • brother or sister of the spouse of the individual;
  • brother or sister of either of the parents of the individual;
  • any lineal ascendant or descendant of the individual;
  • any lineal ascendant or descendant of the spouse of the individual;
  • spouse of the person referred to in clauses (ii) to (vi);]
In case of a HUF:
  • Any Member thereof




An NRI receives a Gift of Rs. 5,00,000 from his grandfather on his 18th birthday. Will this amount of Gift be taxed in the NRI’s hands?


No. Since the Gift is received from his linear ascendant, that is, a relative, there will be no tax implication in the hands of the NRI on receipt of such Gift from his grandfather.




An NRI receives a Gift of Rs. 1,00,000 from his neighbour, who is on his death bed. Will this Gift be taxed in the hands of the NRI?


No. Since the Gift is received on contemplation of death of the neighbour, there will be no tax implication in the hands of the NRI on receipt of such Gift.





 

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