What to do with cash gifts received during wedding?
Currently, tax has been exempted on cash gifts up to Rs 50,000. So if you have received such an amount during your wedding, you can deposit it in your bank account without worrying about paying taxes on it.
During weddings, most of us generally prefer to give cash to bless the happy couple as we believe that the newly-wed will utilize the amount for their needs, considering the occasion laden with heavy investment.
But the newly-wed often get confused as what to do with the money they have received as gifts. They thus end up using cash gifts in normal expenses.
Interestingly, there are variety of schemes available on different portals which provide information on utilisation of these cash gifts. Here's a list of things you can do with your cash gifts, according to BankBazaar.
Sign up for a class
There are few people who often enjoy trying out new things all the time, apart from their daily work life. If you belong to that creed then you can utilize your cash gifts for learning various things, you never know this experience may provide you an alternate career options.
There is also wide range of other options including dance lessons, cooking, learning new language, beauty course, music classes and many more.
Not only this, if you have received quite a sum, this can be utilised for your further education. There are many courses which can help you boost your professional portfolio.
Refund your wedding expenses
It has been generally witnessed that planning for wedding always overshoots the budget. Sometimes, it goes beyond the budget and we are left with no choice than to borrow from other sources to fund the auspicious occasion.
Hence, you can use the cash gifts to pay off any of your outstanding. You can also put this money into your retirement fund.
Park it in your emergency fund
If the amount received is considerable, you can invest that money in emergency fund. After marriage, life can be pretty hard on your finances with household expenses and essential bills eating into your income. It may not be possible for you to eke out money for emergency purposes every month, so this lump sum will come in handy.
Use it for your retirement fund
Investing in retirement fund can always be another good option as you get tax break over the investment and plus you receive a continuous sum in future ahead.
You can also invest the cash you’ve received in long-term instruments like Public Provident Fund (PPF) and Pension plan. You can even enjoy tax breaks on some of these investments.
Use cash to make more cash
There are many market schemes like mutual funds, stocks or any other source of income, under which you can invest this idle cash and get it multiplied in future course.
This supports you in many key decision ahead after marriage, like purchasing a house or buying a car, also for your kids' higher education.
Is there any income tax levied on cash gifts?
Currently, tax has been exempted on cash gifts a having maximum limit of Rs 50,000. So if you have received such an amount during your wedding, you can easily deposit it in your bank account without worrying about paying taxes on it.
However, if cash gifts is higher than Rs 50,000, you are liable to pay tax over it.
According to BankBazaar, if you have received Rs 30,000 cash in your wedding then you do not have to pay taxes, but if you have got nearly Rs 70,000 cash then that Rs 20,000 excess of Rs 50,000 will be subject to tax.
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