Thread by @CAYogesh4u

Do we have to pay #taxes on the gifts we received on #Diwali ?

Diwali fever has passed. Everyone loves gifts. Each of us receives gifts from our loved ones, friends, clients, and bosses.

Keep in mind that not all gifts are tax-free. Some are taxed 🤯 Let's understand 🧵

Generally gifts are in form of Cloths, Sweets, Cash, Bonus, Vouchers, Cards, Gold, Shares, Securities, Jewellery, Bullion, and Virtual Digital Assets. #Crypto

As per @IncomeTaxIndia provisions, gifts of items defined as "movable property" are only subject to tax.

Gifts covered in definition of Movable Property are-

Cash, Diwali Bonus, Gift Vouchers, Gift Cards, Gold, Shares, Securities, Jewellery, Archaeological collections, Drawings, Paintings, Sculptures, Any work of Art, Bullion, and Virtual Digital Assets like #Bitcoin #NFTs

👉Understanding the income tax regulations as they relate to the tax implications of gifts is always crucial.

The MANNER and RELATIONSHIP of the giver and receiver must be examined in order to determine whether the gift is taxable or not.

☑️Gifts from Relatives
Every Gift from certain relatives are always exempt from tax.
These are person's spouse, brother or sister and their spouse, parent's brother or sister, any lineal ascendant or descendant (parents, grandparents, children),and any of those person's spouses.

Anything received over Rs. 50,000 in a FY, except from certain relatives as mentioned above, is taxed in the recipient's hand.

This means,
Anything you get up to 50,000 is exempt from income tax.😀

☑️Gifts from Employers

If the total value of gifts received by an employee in FY is less than Rs. 5000, then those gifts are not
taxable.😀

If it does, the excess over Rs. 5,000 is subject to tax in the hands of the employee as perquisites under "Income from Salary."

Any bonus received is always subject to taxation as Salary income.🤨

It does not have any threshold.

☑️Gifts from Friends and Others:

Any movable property listed above is given to you as a gift and whose combined FMV does not exceed 50,000 in the FY is exempt from taxes.

If it does, the entire value will be subject to taxation.😉

☑️Tax Rate-

The tax on such gifts shall be charged as per the applicable slab rates.

☑️Disclosures-

Gifts from the employer are taxable, they will fall under "Income from Salary."

Gifts from Others will be disclosed under "Income from Other Sources" if they are taxable.

If the gifts are tax-free, no disclosure required in the income tax returns (ITR).

☑️TDS on Gifts-

TDS is not often required for gifts, however according to a recent budget declaration by @FinMinIndia,
TDS under Section 194R may come into picture on receiving gifts in the course of business.

I assume you have a basic understanding of the gifts you received.

Do comment below for questions. Retweet for maximum reach 🙏