Gifts received by a person or HUF: Tax Implications

The topic of whether gifts are taxable is one that taxpayers ask themselves frequently and on a regular basis. You can learn about various provisions relating to the taxability of gifts received by an individual or a Hindu Undivided Family (HUF) in this section. A gift is any money or property that is given to an individual or a HUF without asking for it or in situations where the property is acquired for too little money. Make sure that your NGO is registered under section 12a.

You can get a brief extract on 80 g.

From the perspective of taxation, gifts can be categorised as follows:-

(1) A "monetary gift" is any quantity of money that is given without expecting anything in return.

(2) "Gift of moveable property" refers to a specific movable item acquired without payment.

(3) "Movable property purchased for less than its fair market worth" refers to certain movable goods that were acquired at a discount (or for insufficient compensation).

(4) Immovable property acquired in exchange for nothing is known as "gift of immovable property."

(5) "Immovable property received for less than its stamp duty value" refers to real estate that was purchased for less money than it was worth.

How monetary donations received by an individual or Hindu Undivided Family are taxed (HUF)

Any amount of money received by an individual or HUF without consideration (i.e., a monetary gift received in cash, check, draught, etc.) will be subject to tax if the following criteria are met:-

  (a) the monetary amount received heedlessly;

  (b) the total amount of money received in this manner during the year reaches Rs. 50,000.

It has been stated that presents from residents to non-residents are claimed to be exempt from Indian taxation since the income does not accrue or generate in India, even though the regulations related to gifts apply to everyone. The Finance (No. 2) Act, 2019 has added a new clause (viii) under Section 9 of the Income-tax Act to ensure that such gifts made by residents to a non-resident person are subject to tax in India. This clause states that any income arising outside India, defined as money paid without consideration on or after 05-07-2019 by a person resident in India to a non-resident or a foreign company, shall be judged to accumulate or come into existence in India.

The only time a person's financial gifts won't be taxed is when they are married

Gifts given to someone on their wedding day are not subject to tax. Other than getting married, there is no other circumstance in which receiving money as a gift is tax-exempt. As a result, financial gifts received on special occasions like birthdays and anniversaries will be taxed.

Tax treatment of financial donations from friends

Gifts from family are exempt from taxation (the definition of "relative" has been debated previously). Friends are not considered "relatives" under the definition in the list above, thus gifts they provide will be taxed.

Don't miss this webpage information on section 80g of income tax act.