This is how items acquired throughout Diwali will probably be taxed

Money received in cash or by cheque, immovable property such as land or building and movable property such as gold, jewellery, shares etc. are considered as a gift. Photo: iStock (iStock)

The festive season is all about following rituals, celebrating with your loved ones, pals and kin by exchanging items in money or sort. The items that you simply obtain may not all the time be tax free. You have to be required to pay taxes on them. Part 56(2) of the Revenue Tax gives for taxation of items acquired through the 12 months in case mixture worth of all of the items, whether or not in money or in sort throughout a 12 months, exceed fifty thousand rupees. Presents acquired as much as 50,000 are fully tax free but when this quantity is breached, the entire quantity of items grow to be taxable. For an occasion, when you’ve got acquired 60,000 price of items throughout a monetary 12 months, full quantity of 60,000 will probably be taxable below the pinnacle ‘ earnings from different sources.’

What’s outlined as a present?

Cash acquired in money or by cheque, immovable property corresponding to land or constructing and movable property corresponding to gold, jewelry, shares and many others.

50,000 threshold applies to particular person items or mixture of items?

The taxability of the reward is set on the idea of the mixture worth of reward acquired through the 12 months and never on the idea of particular person reward. If the mixture worth of items acquired through the 12 months exceeds 50,000, then mixture worth of such items acquired through the 12 months will probably be charged to tax.​

How is an immovable property like land and constructing taxed?

​​​Stamp responsibility of immovable property is chargeable to tax, if stamp responsibility worth exceeds the consideration worth of the immovable property by no less than 50,000.

If the consideration is ‘zero’ the stamp responsibility worth which exceeds fifty thousand rupees, the stamp responsibility worth of such property will probably be taxable.

Presents acquired from household are tax free

Presents together with immovable property acquired from kin are exempt from tax. by advantage of Part 56. ​Following individuals can be thought-about as relative ​for this objective:

(a) Partner

(b) Brother or sister

(c) Brother or sister of the partner

(d) Brother or sister of both of the dad and mom

(e) Any lineal ascendant or descendent

(f) Any lineal ascendant or descendent of the partner

(g) Partner of the individuals referred to in (b) to (f).​

Presents acquired from pals are taxable.

Some extra items that are exempt

​​​Reward acquired solely on the event of marriage of the person will not be charged to tax. Aside from marriage there is no such thing as a different event through which reward acquired by a person will not be charged to tax. Therefore, reward acquired on events like birthday, anniversary, and many others. will probably be charged to tax.​​

Presents acquired below will/ by the use of inheritance and items acquired in contemplation of loss of life of the donor are additionally tax free.

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