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Gift Tax

The change in the rule related to gifts says that the receiver has to pay tax for receiving any gift valued at Rs 50,000 and more.

The 'any gift' clause means that not only cash but all gifts of any value. So if someone receives a gift of a house worth Rs 30 lakh (Rs 3 million), then he/she is automatically in the highest income bracket and has to pay 30% + surcharge on value of the house as tax (close to Rs 10 lakh (Rs 1 million) in this case). 

The rule thus effectively prevents money laundering in the guise of high value gifts. 

Which donors' gifts are exempt?
There is exemption for gifts received from certain people. The gifts that one receives from relatives on the occasion of marriage, the gifts receives from parents and grand parents, the gift received by a daughter-in-law from her parents-in-law, and gifts received by way of a will and inheritance are exempt.

A Non-Resident Indian can gift to his/her parents in India from their NRE (Non-Resident External) account without their parents suffering any tax.

It is advisable to consult a consultant before making high value gifts in order to optimize the gift from gift tax and we can assist you taking the most optimal decision.

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