Is gift paid beyond Rs 50K exempted to donor if the donee declare in his returns?

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This discussion clarifies whether a donor is exempt from tax on gifts exceeding Rs 50,000 if the recipient declares it in their tax returns. The consensus is that the donor is not taxed, regardless of the recipient's declaration. However, the recipient will be taxed on gifts over Rs 50,000 from non-relatives, potentially leading to double taxation if the donor has already paid tax on the gifted amount.

Sri ram

Sri ram (Querist)
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04 August 2022 As per Rule, any value of gift received higher than Rs 50K become taxable under the section 56. (Lets assume not through relatives) if it is declared by the receiver does it get exempted to the person who gifts the same? if not allowed, will it not become double taxation in the hands of receiver, if his income falls in income tax slabs?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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04 August 2022 Gift received from non-relative, above Rs. 50,000/- is taxable to receiver, and he must declare it in ITR, unless filing not eligible under the act.
In either case, whether declared or not by receiver, gift given by donor is not taxable to to donor.

Adv. Ravish Bhatt, ADIT, CIOT

Adv. Ravish Bhatt, ADIT, CIOT (Expert)
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04 August 2022 Amount of above 50k is taxable in the hands of recipient as income from other sources u/s.56, if not from specified relatives.
Declaration by recipient does not change anything for donor.

By double taxation, if you mean that donor first paid tax of say 1.25 lacs to have tax paid income of say 8.75 lacs and if this 8.75 lacs is gifted to someone, it will be again taxable for him as income from other sources and result will be that recipient will pay further taxes, then yes it is so and there will be double taxation that way. In terms of Income Tax Act however, same income is not being taxed twice.

Sri ram

Sri ram (Querist)
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05 August 2022 Thanks Adv. Raveesh Bhatt. My point was exactly same. That too perticularly if the donor is in itr1, he has no choice but to pay tax & receiver also has to pay. What a law, then why do they want PAN number entered in gift deed? Instead there should be a system like HRA, you can enter recipient PAN for gift & get that amount exempted. Unfortunately tax payer cannot make voice, whichever party govt in power...

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