Tuesday, June 2, 2009

TAX IMPLICATION ON GIFTS TO RELATIVES

We all do indulge in the practice of giving and receiving gifts both monetary and non monetary. But these gifts at times can attract income tax on it and as such one needs to know the exact tax treatment of gifts both in the hands of the person gifting and the person receiving the gift.
Gift to wife or spouse - If you make a gift in kind or cash to your spouse then it is not taxable in their hands. However, any income generated by the gift in kind or cash shall be treated as your income.
Gift to fiance - Any gift given in kind is tax free. However , cash gifts are tax free only till Rs 50000. If the gift amount exceeds Rs 50000 then the entire gift amount is taxable in the hands of your fiance.
Gifts on marriage - All gifts received on wedding are tax free. There is no monetary limit attached here.
Gifts to parents - Any gift in kind or cash is tax free in the hands of your parents and does not lead to any tax liability for you either.
In all the above cases, one needs to record the gift being given by one party to the another in writing on a simple paper.

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