Gift Tax Rules 2017-2018 – Can we save and avoid Gift Tax?
Gifts are a symbol of love and affection. Parents give gift to Son or Daughter. Parent in-laws give gifts to daughter in-law or son in-laws during marriage. Many of us break their head whether gift money is taxable in India or not. However one should know what gifts are taxable and which gifts are non-taxable. Understanding Gift Tax Rules in 2017 would help you save gift tax and income tax. What are the Gift Tax Rules in 2017-2018? How to Save Income Tax on Gifts? In this article, let me review Gift Tax Rules and possible ways where you can save income tax legally. I have also given frequently asked questions about Gift Tax along with examples.
Also Read: How Salaried Individuals can save Income Tax in India?
What is a Gift?
As per Income tax act, a gift is an asset received without any consideration by the donor. It can be in the form of cash or cheque receipts, movable property (like vehicle, securities, jewellery, antiques, paintings, sculptors etc.), or immovable property (like land, building, house or flat).
Classification of Gifts
For the purpose of Gift Tax, the following items received by individual may or may not be subject to gift tax:
a) Gift receipts of ₹. 50,000 or lower each year
If the value of any asset or money received as a gift is valued at ₹. 50,000 or below in a year, it is considered as tax-free gift.
b) Gift receipts of more than ₹50,000 a year
If any asset or money received as a gift is above ₹. 50,000, the entire amount is taxable in the hands of receiver unless tax exemption rules apply to such gifts.
c) Movable property as gift without consideration
If any movable property is given as gift without consideration and the total movable property value is > ₹ 50,000, then total movable property value is taxable.
d) Movable property as gift with consideration
If any movable property is given as gift with consideration and total movable property value minus consideration is > ₹ 50,000, then total movable property value minus consideration is taxable.
e) Immovable property as gift without consideration
If any immovable property is given as gift without consideration and total stamp value is > ₹ 50,000, then total stamp duty value is taxable.
f) Immovable property as gift with consideration
If any immovable property is given as gift with consideration and total stamp duty value minus consideration is > ₹ 50,000, then total stamp duty value minus consideration is taxable.
What are the Gift tax exemption rules?
1) All the gifts received by an individual or his spouse at the time of marriage are completely exempted from gift tax. It does not matter whether the relative or acquainted is a close one or not. There is no limit on the amount too.
2) Any amount received as gift from close relatives is not taxable (gift tax blood relative). For this purpose, the definition of relatives covers the following relations:
- Spouse
- Parents, grandparents and great grand parents
- Your brothers and sisters and your spouse’s brother and sisters
- Brothers and sisters of your parents
- Your lineal descendants
- Lineal descendants of your spouse
Apart from these relatives, any gifts received from any other relative of the value of more than ₹50,000 in a year is taxable as income in the hands of receiver.
3) Any gift received by an individual under certain specific conditions is completely exempted from gift tax:
By legal heirs or nominees under will or succession
By dependent of deceased employee from employer in the form of bonus, insurance, gratuity, or any sum received solely in recognition of services rendered by said employee.
Any sum received from local authorities or dignitaries in recognition or appreciation of notable deed
Any sum received from universities, educational institutions, or specified foundation or specified registered trust as a reward for academic or extra-curricular performance.
Also Read: How to claim last minute deductions / claims during ITR filing?
4) When an NRI parent, child or relative transfer cash or property as gift, it is not taxable in the hands of the resident recipient.
What are the guidelines for clubbing of gift income?
Cash or asset received by individual or his spouse is exempt from tax but any income earned from this gift in the form of interest or hose rent is taxable. For example- if father transfers a house to his son and rent is received, then the rental income will taxable.
Likewise, any cash gifted by the relatives (as defined by the law) is tax free but the interest income earned out of that gifted cash is taxable in the hands of receiver.
Exchanging gifts is quite a common scenario these days but most of the people are unaware of the tax implications of these gifts. This article is a perfect guide to make you aware how to benefit legally from gift tax exemptions.
Frequently Asked Questions on Gift Tax Rules 2017-2018
1) Is gift given by employers to employee is taxable?
Any gift given by employer to employee is considered as perquisite. Such gifts could be food coupons, gift vouchers, Award money etc., Any amount exceeding ₹ 5,000 in a financial year would be taxable, else it is tax free.
2) Can we gift money to parents to save income tax?
If your parents are retired, you can gift money to them and they can invest in high return investment options and save income tax. Since they are non-earning members, clubbing provisions does not apply.
3) Can we give Gift to Spouse or children (non earning member) to save income Tax?
The amount gifted by you to your spouse or children does not attract tax to them. However any income generated by them would get clubbed with your income and you need pay income tax on the total income.
4) What about gift tax guidelines for gifts given during marriage?
All gifts given during marriage irrespective of “relative” status are exempted from gift tax. However, for movable or immovable properties, it is better to document with a gift deed. Ensure that such gift deed is near to your marriage date.
5) Is there any tax for gifts given by In-laws to daughter in-law or son-law?
Any gifts received during marriage or later point of time are tax free as they fall under “relative” definition.
6) Whether you have to pay tax on Gift received from Aunt (Mother own sister)?
Since your aunt fall under “relative” definition, the amount gifted from her to you is exempted from gift tax.
7) My Aunt Son/Daughter gifted money for more than ₹ 50,000, is there any gift tax?
Only your aunt falls under “relative” definition. However, any gift given by her son or daughter to you is taxable.
8) Is there any income tax on gift received from Parents?
Your parents would fall under “relative” definition, any amount gifted by them to you is not taxable.
9) I am transferring immovable property to my own brother, would it attract gift tax?
Since your brother falls under “relative” category, Gift tax on immovable property In India to your brother would be zero as it is exempted from tax.
10) Would Gift tax applicable for Gifts given by Grand Parents to Grand Children?
Grand children / Grand parents are categorized as lineal descendants as per Gift Tax Rules and fall under “relative” category. Any gift given by Grand Parents to Grand children is exempted from Gift tax.
Also Read: How to file Income Tax Return Online in few minutes?
11) My father’s brother (e.g. Mr.Ramesh) or father’s brother son (Mr.Rajesh) want to gift me a property, will it attract Gift Tax?
We need to see this from other side. For Mr.Ramesh, you are “Brother’s son”. Hence any gift coming from him to you is taxable for you. However, Mr.Ramesh can transfer the property to your father (he would be brother for him and falls under “relative” terminology), hence your father need not pay any gift tax.
12) I purchased Flat and gifted to my wife and she gets rental income. What are tax implications?
Many of us think we are clever and gift flat to their wife to avoid tax on rental income. However since she does not have any other income, such income would be clubbed with your income and you need to pay income tax. One of the best ways is to apply for PAN card in her name and declare income and pay income tax as per income tax slab applicable based for her.
13) I have gifted money to my parents for their regular expenses, does it attract any tax?
If you gift any amount to your parents, it does not attract gift tax for them. However, if they are able to generate any income (e.g. if they invest in bank FD) over and above their basic income tax exemption limit, they need to pay income tax as they would fall under tax bracket.
14) I gave a gift to one of my relative who does not fall under “relative” definition, do I need to pay any Gift Tax?
If you are giving any gift to your relatives (who do not fall under the definition), you need not pay any income tax. However, the Gift tax needs to be paid by the receiver.
15) What is the gift tax rate in India for 2017-2018?
There is no separate gift tax rate in India. Such gift amount should be clubbed with your current income and you need to pay income tax on that.
15) What precautions should be taken to ensure that gifts received from relative definition are adhered as per Income Tax Law?
There are 2 things to be taken care. A) You should document with registered gift deed b) You need to show such gifts in Income Tax Return.
Also Read: Best Investment Plans to save Income tax in 2017-2018
16) How to show or report Gifts received in Income Tax Return (ITR)?
Gifts from relatives / Occasion of marriage: Since these are exempted from income tax, we need not show them in income tax returns. However, high value gifts can always come under scrutiny from income tax authorities at later point of time. Best way is to register through gift deeds and show them under “Exempted income” in income tax returns.
Gifts from others: Other gifts which are taxable should be shown under “income from other source” and necessary income tax has to be paid based on income tax slab.
Cash gift received above ₹. 2 lakh can be subject to penalty u/s 269ST with effect from 1st April 2017, irrespective of the fact that the gift has been received from family member. Hence avoid any cash gifts and go through cheque or transfer to bank account.
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Suresh
Gift Tax Rules 2017-2018 – Can we save and avoid Gift Tax
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Can I gift 30000 US $ to my son for purchase of a house in US ? If so how?
How much tax do I have to pay?
Can I pay in one stroke of in phases?
Your suggestion pl
Hello, This blog provides advice for gift rules that are applicable in India. Since you are giving gift to your son who is in US, you may need to ask him to check local gift tax rule in US. From your side, there is nothing to be done in India except remitting the money.
if my son and daughter in law,both NRI,gift their owned residential house in India,will their be any tax payable?Also will i have to pay registration charges afresh for transfer of title to my name?
My Aunt (spinster) that is my father’s own sister given me 800 shares during 1984, now by virtue of bonus etc comes in Crores, she is now 95Y because of her age she made demote given to me, now is there any Gift liability/Tax liablity under IT act,I only taking care of her old age,there is no legal adoption,but she only done everything to me right from my birth to till date, I am now 61y,recently demat made till now my Aunt only enjoying dividend etc, PL ADVICE regards
I like to know whether a son can gift money to his mother in India which he has taken as personal loan or property mortgage loan ?Is that money taxable ?
can USA Citizen Daughter-In-Law can Gift to Resident Father In Law and will this be exempted from Gift Tax in India
Can my parents gift more than 50000 to my wife.
I.e. gift by father in law or mother in law.
Or can I give more than 50000.
I would like to gift my brother $6,000 cash. He is on Social Security Disability and is 55 living in his own apartment. Will this affect his status under Social Security Disability?
I want to gift my son who has turned 18 this year Rs2L will this attract any tax implications. Secondly how much amount can i gift him every year,
is part gift in delhi is allowed of immovable property?
Is their Mother given gift to his son a flat so attract gift tax applicable in income tax
Govt has acquired our land property & providing the compensation for my father. What is the maximum tax free amount can a father transferred to his son ? If so after how much will it be taxable after the transfer of money to his sons ?
sir i have received property from my friend in May 2018 as gift and the cost of the property is Rs 52 L. Kindly let me know the tax implication and how much amount and when i have to pay tax
if i gift 10 lakhs to my mother in law. is there any tax implications. and if she keep this money for 1 year and then she gift this 10 lakhs to her daughter (my wife). is there any tax implication. then my wife invest this 10 lakh, is there any clubbing factor
Hi, would like to gift by way of cash to my son who is turning 18 next month , would like to know tax implication on the same.
1. up to what amount can i gift my son.
2. whether i will be subjected to any tax liability.(giving gift) any gift deed is required or simple declaration on paper will suffice.
3. if the said amount is invested in his name in FDs the interest income generated will be on his account or will be clubbed with mine.
Hi, my mother wants to gift me Rs. 6 lakhs, as i want to start my new business. What will be the tax implications on the transaction in hte hands of my mother and in my hands as well?
Hi Akansha, Since your mother falls under “relative” terminology as per gifts tax act, any amount given as gift by your mother to you, would be zero tax. However if you invested such money in investment or in business, the returns are taxable from your side. I suggest you to document this through gift deed.
Hello, My uncle wants to give me Rs. 50000 from his NRE Account, can he give me as gift ? Or Can I also get loan from him ? Pls explain me on both these cases
Hi Chandan, Since your uncle falls under “relative” category, he can give gift to you and it is not taxable to you. However, you can document thru deed so that in future it might be useful in case of any IT query. If he want to give loan to you, you can take the same and document and close the transaction when the amount is returned.
My mother wants to purchase a flat in her name for Rs, 40 lac. I want to gift her the amount to purchase the flat. Will there be any tax liability on me ?
Who are these Local Authorities and Dignitaries mentioned at 3) above?
A flat in my wifes name has been sold recently and as per law the capital gain has been deposited with REC The balace amount has been credited to her babk account by the byuer, Both my wife and the buyer are IT assee.My wants to open a fixed deposit in my name for the reamaining amount which is around 30L Should she transfer the amount to my bank account or I can deposit her cheque along with my application for FD. Will there be any TAX implication on her name Please clarify
Dear Suresh
Thank you for this post which explains the various issues pertaining to Gift tax.
I have one doubt though. In Q.6 you suggest that Aunt can give a tax free gift because she is considered a relative. However in Q.11 you mention that Mr. Ramesh cannot give a tax free gift even though he is the Uncle.
Unless I have misunderstood this, could you kindly clarify. I once again want to thank you for your post as it helps understanding complex tax rules which could become a nightmare if not understood properly.
I sincerely hope you will respond to my query. My wife and I are considering gifting money to our siblings as well as their children.
Kind regards
Martin
For gift of shares from one demat account to another offmarket is gift deed mandatory?
My brother wants to gift me cheque of five lakh. What should be the process
Since your brother fall under “relative” category as per Gift tax rules, you can just go ahead and take the cheque. You can show this under “Exempted Income” in income tax returns while filing tax returns to avoid any scrutiny from income tax at later point of time
I got a flat as gift in a reality show,worth 50 lakh.I am separated from my father and have a poor income ,no land…No house.No bank balance…Can i give gift tax? I got it five years before…I cant get it it. ….still…Now in delema ..Saw so many ministers ….fruitless!!!!what can i do…..Plz ..Help me..
Sir My daughter is NRI status has given me a gift above 50000. Is it tax free. Later on after a period of two months I wish to gift my flat to her. What would be Income tax implications and also of stamp duty.
This question is already given in FAQ: Can we give money to parents/spouse to save tax?
So, if I have given 50000 to my parents/spouse as gift. How can I save tax on it? In which section I can put this 50k which I have gifted to my relative?
What will be gift tax on activa vehicle in case we receive it with some amount of article purchase with some showroom. And once charged can it be changed in future and can showroom people has right to again ask for balance from customer. On this Tax what will be GST rate applicable and from which month it started
Is immovable property to father attract stamp duty
If I ( son )give a flat as gift to my father as gift will I have to pay stamp duty for the same in Mumbai?
The value of the flat is 1. 5crores.
How much would be the stamp duty.
My mother has the property and want to sell. Can the sale proceedings be shared between the children? How it will be treated? Under gift tax or long term capital gain?
Sir
Please let me know if a person want give flat his non blood relative on occasion of marriage is there any specific time period for registering gift deed ?
Should we know rate?
My far relative wants to gift me 1lakh cash through back. What is the % of tax to be paid? Who should pay the tax?
Hi,
Myself and daughter jointly acquired a flat at Bhubaneswar,Odisha for a value or Rs 2800000 ( Rs Twenty eight lakh) on sale deed. Now that I want to gift my share ( 50%) to my son-in law (Spouse of daughter) by a gift deed, I want to know whether income tax will attract from the donee (Son-in Law)? Kindly Advise.
Hi,
What is the tax implication if sister (married) gifts immovable property to elder brother?
HI,
What is the tax implication in case sister (married) is gifting an immovable property to elder brother?
i am currently unemplyed and planning to shift abroad with my wife and 2 yr kid. some of my non-blood relattives want to give us approx 50 lac as gift for settling down in new country. do i need to just pay applicable tax under income from other sources or i will have to get a gift deed done on stamp paper.
Hello…I am unable to understand FAQ no 11…gifts received from Father’s brother should not be taxable as they are covered in the definition of relative…please clarify…
I am a salaried person and my all income came as tax paid income and respective TDS deducted. If I give gift of Rs. 250000 from my salary income to my wife and my wife file ITR and shows this 250000 as their income. There is a tax liability from either end? This 20000 interest income generated by my wife would get clubbed with my income and I need to pay income tax on the total income?
I am a salaried person. I have transferred 250000 to my wife bank account. my wife filed ITR and shown this 250000 as there income and invested in Fixed deposits. she get interest income of rs. 20000. There is any tax liability for me or her?
As usual very informative
Thank you
Thanks Siddhartha
clause e & f: Immovable property as gift without consideration & with consideration. What is the meaning of "consideration" in this context. thank you
consideration is monetary benefit like physical cash or bank transfer
Thank u for the useful feedback.