India is a country predominantly recognized for its cultural diversity, customs, and religions. It is a commonplace to find close knitted families that celebrate numerous occasions wherein gifts are exchanged as a symbol of love and affection. At times, gifting can also become a legalized part of your tax planning to reduce tax liability significantly. Starting from the tax year 2017 -18, a separate disclosure of gifts in the ITR form is required to be maintained for filing tax returns.
The following are the provisions for Tax liability in the hands of the recipient (Individual or HUF) of gift.
The recipient is not required to pay income taxes if the money or property is received from a relative or under certain specified circumstances such as on the occasion of marriage or under a will or by way of inheritance, or in contemplation of death of payer. This rule applies irrespective of the value of the gift. It has become imperative to know the taxability of gifts and how to disclose it correctly to avoid any unnecessary tax burden in the hands of the recipient.