Indian culture has a tradition to gift siblings, parents, relatives and friends. If you go to someone’s house, then take a gift with you. Apart from marriage and birthday, gifts are given to each other on any auspicious occasion. But do you know that the Income Tax Act has some conditions, due to which the taxpayer gets a tax exemption on the gift received?
Do I have to pay taxes on receiving a gift?
Let us tell you that income tax on gifts is not on any one gift, but on the total gifts obtained in a financial year. Many people have many questions about this. For example, if I give a gift to my parents, do I have to do it? Let us tell you about it in detail.
Will the gift given to parents be taxed?
According to the Indian Income Tax Act, if a person gives a gift to his parents, he usually does not have to pay any tax. However, there are certain conditions and terms on the basis of which it is decided whether a gift will be taxable or not. If you give cash gifts to your parents, it has no limit and it is completely tax-free. If you gift any property to your parents, then it will also be tax-free. But it is mandatory to make gift deeds. You can gift gold, shares, jewelery etc. because they are tax-free.
When is the capital profit tax payable?
The gifts received from the parents are tax-free under Section 56 (2) of the Income Tax Act. Therefore, you will not have to pay any tax on a gift of Rs 20 lakh. So you do not need to submit any documents, but it is important to keep the gift bill as a personal record for the future reference. At the same time, if parents sell the property given later, they may have to pay the capital profit tax.
