Are Gifts By Your Spouse Or Family Members Taxable? Here’s What IT Department Says

It’s always a nice feeling to get gifts but one thing that often leaves taxpayers confused is the taxability of these presents. That too, if they are from one’s spouse or their family members. It is hard to keep a limit on such gifts. But you need not worry as the Income Tax Department has laid out a set of rules regarding the taxation of gifts received by an individual or Hindu Undivided Family (HUF). Let us take a look in detail at the laws and provisions regarding gifts from spouses or other family members.

According to a circular, by the I-T department, a gift is classified as any sum of money received without consideration or any movable/immovable properties that are received without consideration. Movable and immovable properties that are received at a reduced rate than the market price (i.e. for inadequate consideration) also fall under this category. As per the rules, any gift above Rs 50,000 in a financial year is subject to taxation.

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In case the gift received by an individual is from a family member, the amount will not be taxed. As per the Income Tax Department, the relative should be:

I. Spouse of the individual

II. Brother or sister of the individual

III. Brother/sister of either of the individual’s parents

IV. Sister/brother of the individual’s spouse

V. A lineal descendent or ascendant of the taxpayer’s spouse

VI. A lineal descendent or ascendant of the taxpayer

VII. Spouse of the persons referred to in the categories from II to VI

Gifts received on the occasion of a person’s marriage will not be subject to taxation. “Apart from marriage, there is no other occasion when a monetary gift received by an individual is not charged to tax. Hence, monetary gifts received on occasions like birthday, anniversary, etc. will be charged to tax,” the I-T Department has stated in its circular.

In case of monetary gifts sent from abroad, if the aggregate value received by a HUF or individual exceeds Rs 50,000, and the gifts do not come under the exceptions listed by the Income Tax Department, then the money will be taxed.

Also, cases where the monetary gift exceeds Rs 50,000, the taxation is determined on the aggregate value, and not the individual gift. This means if the value of the gift exceeds Rs 50,000, then the total value of the gifts received in a year will be subject to taxation, not the amount over the threshold limit.