It can save you tax by gifting money, jewelry, property to relations

You can save tax by gifting cash, jewellery, property to family members

In India we now have festivities to rejoice all by the 12 months and change of presents is an important element of those celebrations. Nonetheless, you will need to perceive that presents are additionally used as mode of tax planning.

An try to avoid wasting in your taxes inside the framework of legislation known as tax planning and is taken into account authorized. A present could possibly be in money or in form. Allow us to see what are the most typical types of presents and their taxability.

Presents in money

Present within the type of money, so long as it doesn’t cross Rs 50,000, wouldn’t be taxed. Nonetheless, if the quantity exceeds Rs 50,000, the complete quantity obtained could be taxable. Additional, this must be provided as “Revenue from different sources” on which you pay taxes at charges relevant to the revenue slab you fall underneath. There are exceptions to this rule which have been mentioned later within the article.

Present in form

A present in form may take the type of an immovable asset like land or constructing, or a movable asset like jewelry, utensils, drawings, shares, and so forth.

Immovable asset

Any immovable property obtained as a present could be taxed in your arms. The subsequent step could be to find out the worth that should be taxed. For this, the legislation prescribes one thing referred to as the Stamp Responsibility Worth (generally referred to SDV) of the asset, which is nothing however the worth of the property adopted by stamp valuation authorities for figuring out the stamp responsibility. So, if the SDV is greater than Rs 50,000, the complete SDV is taxed. Else, the present transaction stays tax free.

One other state of affairs could possibly be one the place the asset has been gifted to you, in opposition to which you’ve made a cost, however the cost is much under the value the asset would have fetched out there. Right here, if the SDV exceeds what you paid by greater than Rs 50,000, you’ll have to pay taxes on the distinction between the SDV and cost made. Else, the present stays tax free.

Right here is a straightforward instance to grasp this:

If the SDV is Rs 2,00,000 and the cost made is Rs 100,000. SDV exceeds cost made by Rs 1,00,000. Because the distinction between SDV and cost exceeds Rs 50,000, distinction is taxable within the arms of the taxpayer as “Revenue from different sources”.

Within the above instance, if the cost made was Rs 1,60,000, the distinction between SDV and cost could be Rs 40,000, which is under 50,000 and, therefore, no taxability would come up.

Movable asset obtained as a present

If you obtain jewelry, utensils, and so forth, that are movable belongings as presents, their taxability relies on their Honest Market Worth (FMV). If the FMV exceeds Rs 50,000, the FMV completely is taxable as “Revenue from different sources”. If the FMV is decrease than Rs 50,000, the present is exempt in your arms.

Much like what was mentioned within the case of an immovable property, you probably have obtained any movable property for which you’ve paid a consideration a lot decrease than its market worth and the FMV exceeds consideration by greater than Rs 50,000, such distinction could be taxed as “Revenue from different sources”.

Presents which are tax free

The federal government has declared sure presents exchanged throughout specified events or in any other case as totally exempt from tax. Following are some presents that are totally exempt from tax:

On the time of marriage: Any present obtained on the time of getting married, is totally exempt. This consists of present in money or form with none ceiling restrict.

Will or inheritance: Something obtained from one other particular person by a will or as inheritance from forefathers, is totally exempt from taxation.

From speedy household: As per the Revenue Tax Act, sure relations of a person have been listed, whereby if a person receives a present from any of the listed relations, the receipt might be totally exempt from tax. Such relations embrace partner, brother and sister of self and partner, brother or sister of fogeys or parents-in-law, any lineal ascendant or descendant of self or partner, partner of any of relations talked about right here.

This festive season let use these good choices and save taxes. Saving on taxes is at all times a great way of constructing one’s personal wealth and capital.


  • Present in money, whether it is decrease than Rs 50,000, is just not be taxed

  • Tax on immovable asset obtained as present will depend upon the Stamp Responsibility Worth 

  • Tax on movable asset obtained as present will depend upon Honest Market Worth

The author is founder & CEO ClearTax

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