Gift taxes in India
The Gift Tax Act which came into effect on 1st April 1958 regulates all the Gift taxes in India, the act covers the entire country except for the region of Jammu and Kashmir.As per the Act, any gift in excess of the value of Rs. 25000( cash,check, money transfer,Demand Draft) recieved from anyone other than the blood relative is taxable. Even if a very close friend gifts you an amount in excess of Rs.25000 in cash or check, it needs to be declared and the tax paid accordingly.
Exemptions
Under the following circumstances Gift tax need not be paid:
A. When the gift is given by a blood relative, irrespective of the gift value. B. The gift is less than Rs.25000 in value. C. When the money received was in return for something. When a exchange takes place in return for the money received the transaction will be deemed as purchase and therefore exempt from the gift tax. D. The gift was gifted on your wedding, irrespective of the value of the gift. But a gift received in excess of Rs. 25000 for any other occasion is taxable under the Gift Act.
Procedure for Filing the Tax
As such there is no standard process for filing the gift tax, when the returns are filed the amount of gift is added to the annual income under the ‘Income from other sources’. The taxes now depend on the total taxable income.
The following things must be taken into account while accepting a gift:
The gift is accepted via a gift deed in Writing and the value of the gift of the gift along with the name of the persons receiving and giving the gift is mentioned in the deed. The deed should also be duly signed by both the receiver and the giver of the gift.Finally the gift deed should be registered by paying the requisite stamp duty.
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