CA Umesh Sharma
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Arjuna (Fictional Character): Krishna, during Diwali there is a lot of give and take of various Gifts, but is it exempt under Income tax? Krishna (Fictional Character): Arjuna, many taxpayers gain financially by receiving Gifts on various occasions and Diwali is one of them. There is no Tax Exemp
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FAQ :
No, not all Diwali gifts are tax-exempt. Gifts received from third parties exceeding Rs. 50,000 are generally taxable. However, gifts from specified relatives, gifts received on the occasion of marriage, and inheritances are exempt regardless of value.
Gifts received by an employee from an employer are exempt from income tax if the value is less than Rs. 5,000 in a financial year.
If an immovable property is received from a non-relative or third person for a consideration less than its market value, and the difference is Rs. 50,000 or 10% of the consideration (whichever is higher), the difference will be taxable as a gift in the buyer's hands.
Perquisites are benefits or assets provided to individuals with business or profession income. If the value or aggregate value of these benefits or perquisites (like cars, free samples, or incentives) provided in a financial year exceeds Rs. 20,000, TDS at 10% under Section 194R is applicable.
Under GST, Input Tax Credit (ITC) cannot be claimed on gifts or free samples provided. However, if goods are provided for sales promotion, ITC can be availed.
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