New Delhi: Ahead of Diwali, the Income Tax Department on Wednesday said that persons receiving gifts will have to pay tax on it provided the value of gift, in cash or kind, exceeds Rs50,000.
The tax would have to paid by the recipient by including the amount in his taxable income, said a notification issued by the Central Board of Direct Taxes (CBDT) about three weeks ahead of the Diwali.
The new tax norms would come into effect from 1 October, the CBDT said, clarifying it would not apply on gifts which are received either by relatives or on the occasion of marriages.
There will also be no tax on gifts received by way of will, inheritance or in case of death of the donor.
Earlier, only cash gifts were taxed the threshold for which was raised from Rs25,000 to Rs50,000 in April 2006.
“The IT Act 1961 has been amended with effect from October 1, 2009 to provide that any gift, in kind, being an immovable property or any other property, the value of which exceeds Rs50,000, will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family, as income from other sources...,” the CBDT said.
Persons receiving gifts in excess of Rs50,000 will have to show the value in the income tax returns for assessment year 2010-11 and pay tax on it, the CBDT said.
Gifts received from local authorities, trusts or entities registered as charitable institutions would not attract the provisions of the new tax norms, it said.