Raju is a software engineer working in a technology company in Bangalore City. He is very excited these days as he is getting married in the month of December this year. He hails from those typical south Indian families, where marriage is very big affair, when whole of congregation of relatives takes place. Raju is obviously expecting tons of gifts from his relatives, especially from his in-laws side.
Frankly, though he is very happy about the whole thing, but is little apprehensive about the taxability of cash gifts, he would receive from his relatives during his marriage. Let’s analyze the provisions of taxability of gifts in India, especially when received on some special occasions, like marriage -The Indian Income tax Act says that, “If the aggregate sum of money received during the previous year without consideration exceeds Rs. 50,000 by an individual or Hindu Undivided Family from any person or persons in aggregate, the whole of such sum shall be chargeable to income tax under the head ‘income from other sources”’. Now, the good news, the above provision shall not apply to any sum of money received, if:
- from any relative;
- on the occasion of the marriage of the individual (not restricted to relative per se) ; or
- in contemplation of death of the payer;
- from any local authority;
- from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in the Act; and
- from any trust or institution registered under the Act.
Thus, in view of above, any sum received by Raju MR on occasion of his marriage from any person shall not be taxed as income.
To Wrap up – Readers would appreciate the fact that marriage also gives marvellous tax planning prospect apart from other interesting things.
This article was originally published by Alok Patnia in Taxmantra.com.