Yes, any monetary gifts received from friends which exceeds the amount Rs 50,000 in any financial year is liable to tax. Taxpayer should note that the taxability of the gift is determined on the basis of the aggregate value of gift received during the year and not on the basis of an individual gift.
Hence, if the aggregate value of gifts received during the year exceeds Rs 50,000, then aggregate value of such gifts received during the year will be charged to tax.
Also, once the total value of monetary gift received during the year exceeds Rs 50,000, then the total value of gift received during the year will be charged to tax not on the exceeded amount.
While any monetary gift received on the occasion of marriage from friends does not attract income tax. Apart from marriage there is no other occasion in which gift received by an individual is not charged to tax. Hence, gift received on occasions like birthday, anniversary, etc. will be charged to tax.
However, monetary gifts received from relatives will not be charged to tax in the following cases.
- Money received by a HUF from its members.
- Money received on the occasion of the marriage of the individual.
- Money received under will/ by way of inheritance.
- Money received in contemplation of death of the payer or donor.
- Money received from a local authority as defined under section 10(20) of the Income-tax Act.
- Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in Section 10(23C).
- Money received from a trust or institution registered under
Nothing will be charged to tax if any movable property (other than those covered in the above definition) is received for less than its fair market value.
Say for example, nothing will be charged to tax in respect of a television set received for less than its fair market value because a television set is not covered in the definition of prescribed movable property.
Movable property means shares/securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and bullion, being capital asset of the taxpayer.