The government had abolished Gift Tax in 1998. However, it was reintroduced in a new form in 2004 and it was included in the Income Tax provisions.
gift tax in india (Gift Tax) Was first introduced in 1958. It is levied on giving and receiving of gifts exceeding Rs 50,000 under certain circumstances. The government abolished it in 1998. However, it was reintroduced in a new form in 2004 and it was included in the Income Tax provisions. If the value of the gift exceeds Rs.50,000, then the gift is taxed as income of the receiver of the gift. Gifts can be in any form including cash, jewellery, property and assets, shares, vehicles etc.
Under what circumstances are they non-taxable?
- Money received from relatives- which includes money received from any blood relative, does not include cousins and friends, is not taxable.
- Money received on the occasion of marriage of an individual is not taxable, but gifts on other occasions like birthday, anniversary etc. will be taxable.
- Money received under will/as inheritance.
- Money received in contemplation of the death of the payer or donor.
- money received from local authority [आयकर अधिनियम की धारा 10(20) के स्पष्टीकरण में परिभाषित],
- Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C).
- Money received from or by a trust or institution registered under section 12A, 12AA or section 12AB
- Money received by any fund or trust or institution, any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv)/(v)/(vi)/(vic).
- Money received as a result of dissolution or amalgamation of a company or business reconstruction of a co-operative bank under section 47.
Why gift tax should be abolished?
According to experts, why should only common people pay tax on gifts and why not political parties? Experts believe that gifts received by political parties come under the ambit of non-taxable while gifts received by individuals are taxed by the government. Experts say that gifts received by common people should not be kept in the tax net.