There is no limitations on the amount of money that can be gift tax free to a family member in India. But, it is essential to check rules and regulations for whom does the clauses apply and whether all kinds of gifts are allowed or not.
When it refers to gift taxation, not all gifts are subject to Tax in India, but any gift valued at more than INR 50,000 is taxable, regardless of the nature of the gift.
When a donation exceeds INR 50,000, it becomes taxable under the definition of “Income from other sources” at the administration’s standard rate of tax. In India, there is a tradition of gifting some kind of present on multiple events such as Diwali, Holi, Birthdays, Raksha Bandhan, Christmas, Eid, and so on, and it is crucial to remain aware of the types of gifts that should be given and the amount of gifts that should be given. Gift law, 1958, imposes a tax on the individual who accepts the present.
The legislation applies to all gifts worth more than INR 50000, regardless of the nature of the gift, and all immovable goods are considered liable to tax under Stamp Duty. It is also vital to find out what goods are excluded from taxes and how they compare to one another. These limitations vary depending on the event, commodity, and method of gift exchange.
When it comes to exemptions, the presents are tax free if they are gifted by the following people:
- An individual’s Spouse.
- The individual’s brother or sister.
- The individual’s spouse’s brother or sister.
- The individual’s brother or sister from one of his or her parents.
- Every descendant or lineal ancestor of the individual.
- Any lineal descendant or descendant of the individuals’ spouse.
It is even considered clever to give the gifts under the name of these about relational categories to be aware of all the taxes and also be tax-free at the same time. To be precise, they effectively produce tax-free income while also lowering the overall tax burden.
Hence, the investments made in the name of parents and close relatives will help you save money on taxes and even earn tax-free internet income. In case your parents are senior citizens that is both of your parents are over 60 years old, then they would be eligible for a basic tax exemption of INR 3 lakh, and in case the parents or close relatives have an age above 80 or they can also be called as super senior citizen, the sum is INR 5 lakh.
These are some of the cases about which individuals should be aware and clever about whenever they gift anything to their loved ones. It is believed that the level of income is also a topic of concern when it comes to gifting presents and it is also a saying that if the income of the person is high then the gift, they give to their relatives is also highly priced.
In case of the situation when your very close relatives who come under tax exemption status have low income i.e., below INR 5 lakh then they are exempted to pay any sorts of tax for it.