Diwali season: Do you have to pay tax on gifts received ?

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🎁 Diwali Gifts & Taxes: A Comprehensive Guide πŸ•―οΈ

With the festive season upon us, the exchange of gifts is a cherished tradition. But did you know these gifts can have different tax implications? Let’s dive into the details:

🌟 Gifts from Relatives:

  • Gifts from specified relatives like parents, siblings, and grandparents are entirely tax-exempt, regardless of their value. These heartfelt gifts are considered expressions of love and are not subject to income tax. For example, if you receive a Diwali gift worth Rs. 1,00,000 from your parents, it is entirely exempt from taxation.

🎁 Gifts from Friends & Colleagues:

  • Gifts received from non-relatives, including friends and colleagues, are taxable if the aggregate value of such gifts exceeds Rs. 50,000 during a financial year. This includes cash or kind gifts like jewelry, electronics, home appliances, and even vouchers and gift cards.
  • Let’s break it down with examples:
    • Example 1: If you receive a cash gift of Rs 60,000 from your friend on Diwali, the entire amount is taxable as it exceeds Rs. 50,000.
    • Example 2: If you receive a gold bracelet worth Rs 40,000 from your colleague on Diwali, you won’t have to pay any tax on it. However, if another colleague gifts you a Bluetooth speaker worth Rs 15,000, you’ll need to pay tax on the full Rs 55,000 as it exceeds Rs. 50,000.

πŸŽ‰ Gifts from Employers:

  • Gifts received from an employer fall under the “Income from salary” category. However, there’s an exemption of up to Rs. 5,000 in a financial year on gifts received from an employer.
  • Example: If you receive a cash gift of Rs 4,000 from your employer on Diwali, you won’t have to pay tax on the gift. But if you receive a cash gift of Rs 6,000, you’ll be liable to pay tax on Rs. 1,000 as it exceeds the exemption limit.

πŸ’Ό Gifts in Business:

  • Businesses giving gifts should be aware of Section 194R, which requires tax deduction when the value of the gift given exceeds Rs. 20,000. In such cases, TDS at a rate of 10% is deducted from the gift recipient.
  • Example: If ABC Industries gifts a TV worth Rs 1 lakh to their top dealer, Mr. B, on Diwali, they must deposit a TDS of Rs. 10,000 to the government.

It’s crucial to maintain records of the gifts you receive, especially if they have significant value, to comply with tax regulations. Share this comprehensive guide to spread awareness about Diwali gift taxation and help everyone have a joyful and stress-free celebration! πŸŒŸπŸ’ΌπŸ€

It’s essential to maintain records of the gifts you receive, especially if they have a significant value, to comply with tax regulations.




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Also watch video to know ITC on Diwali Gifts:

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Pooja Gupta

CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

Disclaimer:- The opinions presented are exclusively those of the author and CA Guruji Classes. The material in this piece is intended purely for informational purposes and for individual, non-commercial consumption. It does not constitute expert guidance or an endorsement by any organization. The author, the organization, and its associates are not liable for any form of loss or harm resulting from the information in this article, nor for any decisions made based on it. Furthermore, no segment of this article or newsletter should be employed for any intention unless granted in written form, and we maintain the legal right to address any unauthorized utilization of our article or newsletter.

CA Pooja Gupta (CA, ISA, M.com) having 15 years of experience. Educator and Digital Creator

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