Taxes on Gifts During Festive Season By Amrit Sharma - October 29, 2020 Last Updated at: Dec 22, 2020 12458 Experts suggest that it is better to invest the gifted money. It not only helps in saving tax but also generating tax-free income under prevailing sections offered under I-T laws in the country. Gifts received above Rs 50,000 are taxable under income from other sources. However, there are special exemptions for gifts to some specific relatives like major children and parents. Giving and receiving gifts are very common in India during the festive seasons. This is how we Indians mostly express our warm feelings/gratitude for each other during this time. Have you received any gift during the ongoing festive season? You must be feeling excited, right? In this article, let’s discuss the taxes on gifts during the festive season. However, you need to report any income other than salary (like a gift, the bonus from the employer, prize, lottery etc) to the taxation department in your ITR. Many taxpayers usually face issues while filling details of such receipts in ITR. Go through this article if you have any such confusion. The Income Tax Act 1961 specifies all types of receipts as individual earnings and the same is applicable to gifts as well. If the value of the gifts you receive in a financial year exceeds Rs 50000, the amount will be taxed as a part of your income. The gifts may be of any form- jewellery, cash, shares, movable/immovable property and so on. If you have received any gift (in the form of cash or kind), the same needs to be reported in the ‘income from other sources’ head in your ITR. Such receipts are taxed as per the tax slab applicable to you. In addition, 4% of cess will be charged on them. No allowance or deduction (u/s 80 C or 80 D) is permissible on such an income. file Itr now Here is one important point to consider. The above-mentioned rule is not applicable if you receive the gifts from your relative as presents. But that does not mean that you can call the ‘giver’ your relative even if he is not. To avoid ambiguity, there are Income Tax rules that specify relatives from whom you can receive ‘tax-free’ gifts. These include- Parents Spouse Brothers and sisters of you/ your spouse Brothers and sisters of your parents Lineal descendants of you/ your spouse You should keep in mind the following points as well- Let us suppose you have received a car from your relative at your wedding. Do make sure the date mentioned in the gift deed is the date of your marriage or a date close to it. Any gift you receive as a result of inheritance (or through a will) is not taxable. However, if you generate any rental or other income from such a gift (property or house), the same will be taxed under the head ‘income from other sources’.