WHAT FALLS UNDER GIFT TAX?

Under the I-T law, any sum of money, movable or immovable property received by you without consideration (without a quid pro quo) is chargeable to tax as `Income from other sources'; even winnings from lotteries, interest income, to name a few, fall under this head.

Exemptions Available:

However, certain exemptions are available on this count and not all `gifts' would be taxable.

Gifts From Relatives Not Taxable:

Cash, cheques or gifts in kind received from relatives are not taxable. The I-T law has defined `rela tives' elaborately to include your spouse, your maternal or paternal aunts and uncles (and their respective spouses) and your and your spouse's siblings, grandparents, parents, children and grandchildren (and their respective spouses).Gifts received when you get married, or under a will or by way of inheritance are not taxable.

Up To Rs 50,000 Not Taxable:

Cash or gifts in kind (presents) from non-relatives are not taxable up to a value of Rs 50,000 in a year. However, if it is say Rs 60,000, then this entire value of Rs 60,000 is added to your gross total income and you pay tax on it, as per your tax slab. In case you have been gifted immovable property, without any consideration, and the stamp duty value exceeds Rs 50,000 -it is this stamp duty value which will be part of your gross income.However, if you have paid some consideration, but it is still less than the stamp duty value, the difference is added to your income. For presents other than immovable property (say jewellery), the same principle applies except that the fair market value of such a gift is considered. Immovable property denotes landbuildings. Movable property includes: shares & securities, jewellery, bullion, drawings, paintings, sculptures, archaeological collections and works of art.

CAUTION POINT:

Gifts from friends received on birthday or marriage anniversary in excess of Rs.50,000 in a year are taxable. Also you should beware of income tax clubbing provisions. For instance, you've gifted your wife -who is a housewife -a cheque of Rs 2 lakh and she earns interest on it, this interest would be clubbed with your income.