- As per the Income Tax Act, 1961 if the value of gifts received is more than Rs. 50,000 a year, then such amount is taxed as income in the hands of the receiver. These gifts may be in any form – cash, jewelry, movable and immovable property, shares etc.
However, this rule is not applicable if your relatives present the gifts. Now just to escape gift tax in India you can’t call a person your relative saying he is the son of my uncle’s neighbor’s vendor’s sister! To avoid scenarios like these, the income tax rules specify relatives from whom tax free gifts can be received. These are:
- Parents – Spouse
- Your and your spouse’s brothers and sisters
- Brothers and sisters of your parents
- Your lineal descendants (including spouses)
- Lineal descendants (including spouses) of your spouse –
Income Tax Slabs Income Tax Rates Total income less than Rs.2,50,000. -NIL- Total income greater than Rs.2,50,000 but less than Rs.5,00,000. 10% of the amount by which it exceeds Rs.2,50,000.