What is gift, is it taxable, who are relatives, which gift to be shown in Income Tax Return and what is clubbing of income.

What is a gift?

Gift is an object, given voluntarily to someone without any expectation of payment or anything in return. It is also an expected or sometimes unexpected subject depending on the different situations.

Are gifts Taxable?

Thanks to the endless celebrations in India Gifts are a very normal & basic thing. It is more of a status symbol, that has no limits when it comes to giving. But it is very less known to the citizens of India that it has a limit & if it crosses one has to pay a decided tax.

The gift tax decided by government of India was released in 1958, known as the Gift Act, 1958(GTA). It was released with a target to force charge on getting and giving gifts under particular conditions. It is important to realize that tax collection engaged with gifts in India is to dodge any further outflow or tax stealing in any way.

Relatives you can receive tax free gifts from?

Husband / Wife

Son / Daughter (Step son/ Step daughter)

Father / Mother (Step father/ Step mother)

Brother / Sister

Grandfather / Grandmother

Great Grandfather / Great Grandmother

Father’s Brother (and their wife) / Father’s Sister (and their husband)

Grandson / Granddaughter

Daughter in law / Son in law

Mother in Law / Father in law

Brother in law (and their wife) / Sister in law (and their husband)

Spouse’s Grandfather / Spouse’s Grandmother

Great Grandson / Great Granddaughter

Spouse’s Great Grandfather / Spouse’s Great Grandmother

Mother’s Brother


Which gift to be shown in Income Tax Return?

Any type of gift which crosses the amount of ₹50,000 is considered to be imposed under the Gift Act, 1958(GTA). Be it any type of gift, gold, property, mobile phone, cash, etc. if crosses ₹50,000 it is taxable amount at 5% of total.

What is clubbing of income?

When the income of any other person is included in the assesses income such process is called clubbing of income. This generally happens in the cases when assessee retain the ownership of an asset but decide to transfer its income by doing an agreement or any other way, the Act will still consider that income as your income and it will be added to your total income for taxation purposes. It also happens when any income is earned by his minor child. The same shall also be included in assessee’s income. For example,

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