![]() However, any income or capital gain arising from these gifts in the future would be subject to tax. Gifts in kind, such as jewellery, shares, or bonds, when given by a father to his daughter, are exempt from tax at the time of gifting.However, any income generated from the inherited property, like rent from an inherited house, would be taxable. If a daughter inherits property or money from her father, either through a will or due to succession laws, such gifts are also exempt from tax.This exemption is crucial as marriages in India often involve substantial gifts. This means that if a father gifts any amount or property to his daughter on her wedding, it is entirely exempt from tax. One of the most significant exemptions is for gifts an individual receives on the occasion of their marriage.The term “relatives” for this purpose includes parents, and thus, any gift from a father to his daughter would not attract any tax, irrespective of its value. As per Section 56(2) of the Income Tax Act, gifts received from relatives are exempt from tax.Understanding these exemptions can help in effective tax planning and ensuring compliance. While the Income Tax Act lays down general rules for the taxation of gifts, specific exemptions apply, especially when it comes to gifts from a father to his daughter. ![]() It will be taxed under the category of “Other Income.”ī) Inadequate Consideration: If the consideration is less than the stamp duty value of the property and the difference is greater than the higher of Rs 50,000 or 10% of the consideration, then the father will be taxed. Gift from father to daughter in the Form of Immovable Property:Ī) No Consideration: If the value of such property exceeds Rs 50,000, the father will be taxed. Monetary gift from father to daughter: Any amount of money received without consideration by the daughter and the aggregate value of such money received throughout the year exceeds Rs 50,000 will be taxed in the daughter’s hands.Ģ. The following are the situations in which gifts are taxed: Gifts are taxed in the recipient’s hands under the heading “Income from Other Sources.”ġ. Taxation of Gift from father to daughter (General Rules) While the tax laws have evolved, the essence has remained – genuine gifts, especially within the immediate family, should not be burdened with tax implications. In the context of gifts from parents to children, the regulations have always been considerate of the familial bond and cultural practices. For instance, the definition of gifts was expanded to include immovable property and certain movable properties received without or for inadequate consideration. Over the years, the rules have been refined to address various ambiguities and potential areas of misuse. For this purpose, the definition of “relatives” included parents and children, ensuring that genuine gifts within families remained untaxed. Under Section 56(2)(v) and later amendments, gifts received by any individual or Hindu Undivided Family (HUF) over ₹50,000 in a year would be taxed as income unless they were from a defined relative or received during specific occasions like marriage. Recognizing the potential for misuse, the government reintroduced the taxation of gifts under the Income Tax Act in 2004. ![]() This period saw a rise in the misuse of this provision, with many using it as a loophole to evade taxes by disguising income as gifts. In 1998, the Gift Tax Act was abolished, leading to a period where gifts were not taxed. However, gifts from specific relatives, including parents and children, were exempted from this tax, recognizing the cultural and traditional importance of gifting within families in India. Under this act, gifts, both movable and immovable, were taxed if their value exceeded a certain limit. Initially, the Gift Tax Act was introduced in 1958. The concept of taxing gifts in India has seen various changes over the decades. ![]() Section 56 of the Income Tax Act delves into the taxation nuances for gifts, especially those received without or with inadequate consideration. This means that if someone willingly gives away their property, be it cash or otherwise, without expecting anything in return, it’s considered an unconditional gift.īut while the act of gifting might come from the heart, it’s essential to understand its legal and financial implications. Legally, as per the Transfer of Property Act of 1882, a gift is described as a voluntary transfer of ownership without any consideration from the giver. Especially between parents and children, gifts hold a special place, transcending mere monetary value. Gifting is an age-old tradition in India, deeply rooted in our cultural practices, often symbolizing love, respect, and goodwill. ![]()
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