Gift Tax Calculator

Taxable Income

• Gift is taxable in the hands of recipient and it is taxable at their slab rates
• Income Tax on Taxable Income may need to be paid as an advance tax periodically during the year to avoid interest under section 234*

Who are 'Relatives' ?

The definition of 'Relatives' where the tax on gifts are exempt in the hands of the receiver is

1. Spouse (Wife / Husband) of the individual
2. Brother or sister of the individual
3. Brother or sister of the spouse of the individual
4. Brother or sister of either of the parents of the individual
5. Any lineal ascendant or descendent of the individual
6. Any lineal ascendant or descendent of the spouse of the individual;
7. Spouse of the persons referred to in (2) to (6).

Monetary

1. Any sum of money received without consideration (read as agreement) is known as "Monetary Gift"
2. Monetary gift includes Cash, cheque, demand draft etc
3. Monetary Gift received from relatives at any occasion is exempted from tax irrespective of amount
4. Monetary Gift received on the occasion of marriage is exempted from tax irrespective of amount and irrespective of person
5. Monetary Gift received from anyone at any other occasion is taxable in the hands of recipient if the total value of gifts received in a year exceeds Rs 50,000
6. Monetary Gift received from Friends is taxable if the amount exceeds Rs 50,000 in a year

Immovable Property

1. If the immovable property (land or Building or Both) is received by an individual/HUF and the stamp duty value of such property received without consideration exceeds Rs 50,000, then it is taxable in the hands of recipient
2. Immovable Property received from relatives is tax exempt but clubbing provisions might apply in respect of income arises out of asset
3. Immovable Property received on the occasion of marriage is not taxable irrespective of stamp duty value and irrespective of person
4. Immovable property is received for inadequate consideration: If consideration (agreed value) is less than the stamp duty value of the property and the difference between the stamp duty value and consideration is more than the higher of
• Rs 50,000 and
• 10% of consideration

Then the difference between the stamp duty value and the consideration shall be chargeable to tax in the hands of taxpayer as 'Income from Other Sources'

Movable Property

1. If the Movable property is received by an individual/HUF and the fair market value of such property received without consideration exceeds Rs 50,000, then it is taxable in the hands of recipient
2. Movable Property received from relatives is tax exempt but clubbing provisions might apply in respect of income arises out of asset
3. Movable Property received on the occasion of marriage is not taxable irrespective of stamp duty value and irrespective of person
4. Motor car does not come under the definition of prescribed movable property; hence, nothing will be taxed in respect of purchase of motor car

Best Practices

1. Have a Gift Deed written, signed by the both the parties on a stamp paper is easiest way to have an agreement with both the parties to avoid future problems.
2. It's even more secure to avoid any future litigation on the gift transaction by registering your Gift Deed with the state registration department to have more legal, bonded
3. Generally, the gifts once given is non-returnable unless there is a fraud and/or having written language in the gift deed that dictates the conditions in which gift to be returned back
4. Documented gift deed is a good practice even for the monetary gifts to show case the intent of the transaction and to avoid future issues.

Other Important things to consider

1. One cannot save tax by giving a gift to others as they are giving the gift only after the tax.
2. Money / property received through the Will (after one's death) will not come under the gift tax rules and is not taxable.
3. It's important to show the gift received should be included in the Income Tax Return (you may file your ITR using EZTax.in for free or let our Tax Expert help you at an affordable fee)

How Valuation of movable or immovable assets considered ?

1. Gold / Jewellery or equivalent - use the purchase value as on the invoice as fair market value. In case of no evidence, open market value must be estimated from a local registered valuer.
2. Immovable Property - Stamp duty value
3. Shares and other soft instruments - Open stock exchange rate as on the gift date