The idea of expressing love and warmth for any relationship in India is all about exchanging gifts on every social occasion. According to Indian Income Tax Return regulations, the expensive gifts comes under the income statement of the receiver and must be declared under income statement. These conditions apply only when the amount of Gift received goes over 50,000 rupees a year.
Going more legal about the Income Tax Return Filing regulations, we can see more description over gifted items and related Tax in the “Income Tax Act, 1961. It describes that gifts such as cash, jewelry, vehicle or properties are taxed if not received from any relatives. The definition of relatives is also defined clearly in this act which includes parents, Spouse, siblings, spouse’s siblings, parent’s siblings and lineal Descendants.
Except the specified relatives, other gifts that are out of tax limit are the ones received during weddings but it must have the date mention in gift deed. Also, inherited gifts are exempted from Income Tax Return conditions if that has been delivered in the way of will. However, any income generated later by that gift is taxable as per normal tax rate.
Other than these mentioned gifts, all other ones are taxable and will be counted as a part of your income. So, while doing the Income Tax Return Filing work, you must need to mention them in your income statement. Therefore, it is advisable that you must collect the accurate and necessary documentations while exchanging gifts.
Correct documentations help in calculating Income Tax Return while you are being scrutinized by a Tax officer. Gifts that are liable to be taxed as per norms must be mentioned into your income tax to avoid any kind of tax-avoidance penalty. Penalty for hiding big gifts in the income statement are same as the regular tax-avoidance penalty rules.
Therefore, it is better to be careful to mention all big gifts that are not exempted from tax liability during Income Tax Return Filing.