Gifts in excess of Rs 50,000 will be taxed: CBDT
Ahead of Diwali, the Income Tax Department on Wednesday said that persons receiving gifts will have to pay tax on it provided the value of gift, in cash or kind, exceeds Rs 50,000.
New Delhi: Ahead of Diwali, the Income Tax Department on Wednesday said that persons receiving gifts will have to pay tax on it provided the value of gift, in cash or kind, exceeds Rs 50,000.
The tax would have to paid by the recipient by including
the amount in his taxable income, said a notification issued
by the Central Board of Direct Taxes (CBDT) about three weeks
ahead of the Diwali.
The new tax norms would come into effect from October 1,
CBDT said, clarifying it would not apply on gifts which are
received either by relatives or on the occasion of marriages.
There will also be no tax on gifts received by way of
will, inheritance or in case of death of the donor.
Earlier, only cash gifts were taxed the threshold for
which was raised from Rs 25,000 to Rs 50,000 in April, 2006.
"The IT Act 1961 has been amended with effect from
October 1, 2009 to provide that any gift, in kind, being an
immovable property or any other property, the value of which
exceeds Rs 50,000, will become taxable in the hands of the
donee, being an individual or a Hindu Undivided Family, as
income from other sources...," the CBDT said.
Persons receiving gifts in excess of Rs 50,000 will have
to show the value in the income tax returns for assessment
year 2010-11 and pay tax on it, CBDT said.
Gifts received from local authorities, trusts or entities
registered as charitable institutions would not attract the
provisions of the new tax norms, it said.