{"id":19495,"date":"2020-11-12T12:51:20","date_gmt":"2020-11-12T07:21:20","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19495"},"modified":"2020-11-12T12:52:48","modified_gmt":"2020-11-12T07:22:48","slug":"tax-authority-levy-tax-on-diwali-gifts","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/","title":{"rendered":"How Tax Authority Levy Tax on Diwali Gifts? Here what\u2019s you Need to Remember!"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Diwali is the festival of light which is celebrated all across the nation with full of energy and positive vibes. Exchanging of gift is quite common in this festival. But what we never realized that gifts we received on this auspicious occasion attract taxes to a considerable extend.  That means that some of the gift that you received on this festive occasion may falls under certain tax slab recommended by the income tax department. In this write-up we will provide you generalized idea about the tax on Diwali gifts. Before we shed some light on the tax on diwali gift, let take a look in the historical context of the same. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/#An_overview_of_Dissolution_of_Gift_Tax_Act\" >An\noverview of Dissolution of Gift Tax Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/#What_Section_2_24_and_Section_56_2_of_the_Income_Tax_Act_says\" >What Section\n2 (24) and Section 56 (2) of the Income Tax Act says?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/#Tax_Implications_on_the_Gift_Received_From_the_Relative\" >Tax Implications on the Gift Received From the Relative<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/#Points_worth_remembering_Regarding_Tax_on_Diwali_Gift\" >Points worth remembering Regarding\nTax on Diwali Gift<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/tax-authority-levy-tax-on-diwali-gifts\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_overview_of_Dissolution_of_Gift_Tax_Act\"><\/span>An\noverview of Dissolution of Gift Tax Act <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Prior to 1998 when the Gift Tax Act was in\nexistence, the donor in the gifting process had to confront 30% of tax on the\nvalue of the gift. Further, the same act abolished under the guidance of\nfinance minister Yeshwant Sinha in the year 1998. In 2004, government came up\nwith new provisions that provide tax exemption on gift taken by blood relations\nas per the Section 56, but it was taxable if the conditions were breached. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Section_2_24_and_Section_56_2_of_the_Income_Tax_Act_says\"><\/span>What Section\n2 (24) and Section 56 (2) of the Income Tax Act says?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 2(24) of the IT Act states that the\ngifts received by the person would be treated as his\/her income. Meanwhile,\nSection 56(2) talks about the exemption and tax liabilities on them. <\/p>\n\n\n\n<p>In case the aggregate value of the gift received from different sources for a given year surpassed Rs 50,000, such an income would be taxable under the IT Act. But, if the gross amount of the gift received remain under the Rs 50,000 mark, then no tax liabilities would be imposed on the recipient in such a case. All the gifts whether received in cash or as a gift voucher or in-kind have to be considered for arriving at the threshold.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_Implications_on_the_Gift_Received_From_the_Relative\"><\/span>Tax Implications on the Gift Received From the Relative <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Gifts worth Rs 50,000, received from blood\nrelations are excluded. The exemption in the view of such exclusion included\nsister, brothers, spouse of the receiver himself. It also includes spouse\u2019s\nbrother and sister. <\/p>\n\n\n\n<p>Furthermore, the definition of the relatives under the law also covers the individuals who are lineally ascendants of decedents of the recipient. The definition of relative doesn\u2019t encompass the entire relative despite being so vast in nature. Gift received from the following individuals are exempted, those are as follows:- <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"1024\" height=\"768\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Exempted-Gifts-1024x768.png\" alt=\"Tax Implications on the Gift \" class=\"wp-image-19519\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Exempted-Gifts-1024x768.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Exempted-Gifts-300x225.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Exempted-Gifts-768x576.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Exempted-Gifts.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Gifts Received from Friends and Others<\/h3>\n\n\n\n<p>If the recipient receives the gift from the\nindividual other than the blood relation then it would be come under the tax\nregime. The tax exemption is applicable upto Rs 50,000 on the entire gift received\nfrom all sources. &nbsp;However, gifts (either\nDiwali or any other) up to Rs 50,000 received in aggregate during the financial\nyear are exempt from tax.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Gifts Received From the Employer<\/h3>\n\n\n\n<p>As per the <strong>IT Act<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Information_Technology_Act,_2000\"><strong>[1]<\/strong><\/a><\/sup>, if an employer presents any cash or gift voucher amounting to less than five thousand rupees for a given financial year, won\u2019t attract any tax liabilities. However, of the gift value surpasses the given amount then the whole amount would be deemed as an individual\u2019s salary and taxed according to the slab rate. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Gift Received By the Professional and Business Owner <\/h3>\n\n\n\n<p>The gift received by the professional or business owner during the course of their work would attract <a href=\"https:\/\/corpbiz.io\/learning\/exemption-from-tax-liability-on-receiving-of-money\/\"><strong>tax liabilities<\/strong><\/a> irrespective of the basic threshold limit. Things like sweet boxes and dry fruit are required to be deemed as a part of taxable income because such gift manifest privilege received during the course of professional or business activities.\u00a0 <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Situation\nunder Which Gifts are Exempted <\/h3>\n\n\n\n<p>If\nthe recipient receives the gift from the relative or under specified events,\nthere would be no tax imposition. The permissible events are given below:-<\/p>\n\n\n\n<ul><li>Wedding<\/li><li>By way of contemplation of demise of the payer<\/li><li>Gift presented by the local administration. <\/li><li>Gift presented by the educational institutions as per\nSection 10(23). <\/li><li>Gift presented by the charitable organization<\/li><\/ul>\n\n\n\n<p>Be wise while presenting or receiving gift in the upcoming festive season. Tax authority might impose tax on diwali gifts once the gross value of the received gift surpasses the Rs 50,000 mark. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Points_worth_remembering_Regarding_Tax_on_Diwali_Gift\"><\/span>Points worth remembering Regarding\nTax on Diwali Gift <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Gift received during special occasion such as marriage\ndoesn\u2019t attract any taxes. Under such scenario tax on Diwali gifts are nil. <\/li><li>For example- you have received a bike as a gift from your\nblood relation on the occasion of your weeding. Make sure the gift deed for the\nsame should contain the date of your marriage in order to avail the tax\nbenefits. <\/li><li>Any gift you received in the form of will or inheritance\ndoes not come under any tax liabilities. However, any income reaped from such a\ngift will be taxable under the head \u201cincome from other sources\u201d. <\/li><li>Any gift received in the contemplation of the demise of the giver\nis eligible tax exemption.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Gifting is nothing but an expression of love and affection. By taking taxation into the account, it becomes important for the taxpayers to know their tax liabilities and way of its disclosure. While receiving valuable gifts during the festive season, don\u2019t forget to put the taxation norms into the consideration.\u00a0Tax on Diwali gifts seems to be an unjustifiable proposition for many of us but we should not forget that the gifting is also is sort of value transfer.\u00a0 <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/cbdt-provides-itr-filing-compliance-check-for-scheduled-commercial-banks\/\">\nCBDT Provides ITR Filing Compliance Check for Scheduled Commercial Banks\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Diwali is the festival of light which is celebrated all across the nation with full of energy and positive vibes. Exchanging of gift is quite common in this festival. But what we never realized that gifts we received on this auspicious occasion attract taxes to a considerable extend. That means that some of the gift [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":19501,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[152],"tags":[1210],"acf":{"service_id":"127"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":2899,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19495"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19495"}],"version-history":[{"count":19,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19495\/revisions"}],"predecessor-version":[{"id":19523,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19495\/revisions\/19523"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19501"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}