Got cash, shares as gift? Know when they are taxed
What is considered a 'Gift' under the Income-tax Act? Are gifts received from family members or specified relatives taxable? On the occasion of your own
What is considered a 'Gift' under the Income-tax Act? Are gifts received from family members or specified relatives taxable? On the occasion of your own marriage Through a will or inheritance In contemplation of the donor's death From specified government bodies or approved charitable institutions Tax treatment of gifts when received from non-relatives Type of gift received from non-relatives When does it become taxable? Cash If the aggregate amount of cash gifts received during the financial year exceeds Rs 50,000, the entire amount becomes taxable. Immovable property (received without consideration) If the stamp duty value of the property exceeds Rs 50,000, the stamp duty value is taxable. Immovable property (received for inadequate consideration) The difference between the stamp duty value and the purchase price is taxable if it exceeds the prescribed safe harbour limits. Specified movable properties (such as jewellery, shares, securities, paintings, bullion and similar assets) received without consideration If the fair market value (FMV) exceeds Rs 50,000, the FMV is taxable. Specified movable properties received for inadequate consideration The difference between the fair market value (FMV) and the consideration paid becomes taxable if it exceeds Rs 50,000. How should taxpayers report gifts in their Income Tax Return? What support documents should you keep for a gift transaction?
For immovable property, they should keep the registered gift deed, stamp duty valuation, property documents and payment records. For shares or securities, demat statements, transfer records and valuation details should be maintained. For jewellery or other covered movable assets, invoices, valuation reports and gift declaration should be preserved. Receiving money from your parents? Gifting property to your children? Or receiving shares from a relative? Before you do, it's important to understand how the Income-tax law and rules treat different types of gifts. The tax implications can vary depending on the nature of the gift, its value, and the relationship between the donor and the recipient.Here's a look at when gifts are ta free, when they become taxable, and the reporting requirements taxpayers should know.A gift generally means money, movable or immovable property received without paying anything or by paying much less than its actual value.“While the Income-tax Act does not define the term "gift" exhaustively, its taxability is governed by Section 56(2)(x), which taxes specified receipts unless they fall within prescribed exemptions,” says CA Chintan Ghelani, Partner, Direct Tax, N. A. Shah Associates LLP.“The provision covers cash, land, buildings, jewellery, shares, securities, archaeological collections, paintings, sculptures, bullion, virtual digital assets and certain other specified properties received without or for inadequate consideration,” he explains.One of the biggest exemptions under the Income-tax Act relates to gifts received from specified relatives.
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