1 .Gift categories
As far as taxation is concerned, a gift can be classified as follows:
- Any sum of money received without consideration, that is, when it’s not payment or remuneration or a legally binding exchange.
- Specified movable properties received without consideration.
- Specified movable properties received at a reduced price.
- Immovable properties received without consideration.
- Immovable properties acquired at a reduced price.
Here, we shall only consider money and movable properties as gifts during the festive occasion.
2.Taxation of gift money
If the aggregate value of the monetary gifts received during the financial year exceeds Rs.50,000, it will be taxed. It will not be taxed only if it is received from a relative, where a relative is specified as spouse, brother or sister of the individual or his spouse, brother or sister of either of the parents, any lineal ascendant or descendent of the individual or his spouse, or spouses of those mentioned above. Since friends are not ‘relatives’ as per the above definition, the gifts received from them will be taxable, if the other criteria of taxing gifts are satisfied. Monetary gifts are also not taxable if received during marriage, as inhertiance, etc, but we shall
3.Taxation of movable property as gift
The prescribed movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer, and Virtual Digital Assets (crypto assets and non-fungible tokens or NFT) as well. If such property is received without consideration and its aggregate fair market value during a financial year exceeds Rs.50,000, it will be taxed. As in case of money, such property received from specified relatives will not be taxed. If the value of property is less than the fair market value, then it will be taxed if the difference between the aggregate FMV and consideration does not exceed Rs.50,000. If it exceeds this amount, then the entire difference is taxable, not just the difference that exceeds Rs.50,000.
4.Gifts from employer
Any gifts, vouchers, or bonus that you receive from your employer during festive occasions such as Diwali, Christmas, etc, will not be taxed if the aggregate amount of these gifts during a financial year does not exceed Rs.5,000. If the amount exceeds this threshold value of Rs.5,000, the gifts will be taxed under the head ‘income from salary’ as per your tax bracket.
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Disclaimer: The advice in this column is not from a licensed healthcare professional and should not be construed as psychological counselling, therapy or medical advice. ET Wealth and the writer will not be responsible for the outcome of the suggestions made in the column.