Reviewed by Sep 30, 2020| Updated on
In India, income tax is charged on gift transactions. Although there are few exceptions, one has to pay tax on certain gifts received in India. Even a casual exchange of money between friends and family members can bring tax incidence on the person receiving the gift.
Gift tax in India was introduced in the year 1958 and was abolished in 1998. The government reintroduced it in the year 2004 under the head "Income from other sources". Receiving or sending gifts can be a part of money laundering or tax evasion, so the tax officers keep an eye on such transactions through the details filed under the income from other sources head.
Taxation rules on gifts exchange have been laid down under section 56 (2)(vi) of the Income Tax Act. It states that any gift received with or without consideration in excess of Rs 50,000 in a financial year will be added to your income from other sources and taxed according to your slab.
Here are few exceptions where no tax will be applied on the gift received: 1. Gifts received from the blood relatives 2. Gifts received on the occasion of marriage 3. Gifts received as inheritance or through a will
The income from any such gifts will be added to your income from other sources and taxed according to your slab. You can use any ITR form to report such income and pay tax accordingly.