Budget 2023: What is Gift Tax and why govt should abolish this?
Budget 2023: If the value of the gift exceeds Rs.50,000, then the gift is taxed as income in the hands of the person who receives the gift.
Budget 2023: Gift tax was introduced in 1958 in India. It is levied on giving and receiving of gifts worth more than Rs 50,000 under certain circumstances. The government had in 1998 abolished this. However, it was reintroduced it in 2004 in a new form and included the same in the Income Tax provisions.
If the value of the gift exceeds Rs.50,000, then the gift is taxed as income in the hands of the person who receives the gift. Gifts can be in any form including cash, jewellery, property, shares, vehicle, etc.
Under what circumstances gifts are non- taxable?
1) Money received from relatives— which includes money received from any blood relative, this does not include cousins and friends are non- taxable.
2) Money received on the occasion of the marriage of the individual is non-taxable, on other occasions like birthday, anniversary etc the gifts will be taxable.
3) Money received under will/ by way of inheritance.
4) Money received in contemplation of death of the payer or donor.
5) Money received from a local authority [as defined in Explanation to section 10(20) of the Income-tax Act].
6) Money received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in section 10(23C). [w.e.f. AY 2023-24, this exemption is not available if a sum of money is received by a specified person referred to in section 13(3)]
7) Money received from or by a trust or institution registered under section 12A, 12AA or section 12AB
8) Money received by any fund or trust or institution, any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv)/(v)/(vi)/(via).
9) Money received as a consequence of demerger or amalgamation of a company or business reorganisation of a co-operative bank under section 47.
Anil Singhvi’s take
Zee Business Managing Editor Anil Singhvi has asked why only commoners should pay tax on gifts and why not political parties? He said that gifts received by political parties are non-taxable whereas gifts received by individuals are taxed by the government. He appealed to make gifts received by individuals non-taxable too.
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