Marriage gift tax: Marriage in India is not just a social ritual, but an important opportunity full of gifts and expenses. In such a situation, the question often arises that what income tax has to be paid even on the gifts found on the occasion of marriage? The answer is- yes and not. It actually depends on whom, when and who got the gift.
There is a provision of tax on gifts under Section 56 (2) (x) of the Income Tax Act, 1961. However, some special discounts have been given on the occasion of marriage, but not in all situations.
What are the tax rules on gifts found in marriage?
Under the Income Tax Act of India, if a person gets a gift of more than ₹ 50,000 in cash, property or any other form in a financial year, then he usually comes under tax. But this rule does not apply to the gifts received on the occasion of marriage.
Which gifts get discounts?
- The groom or bride does not tax the gifts received, whether a relative or a non-relative.
- This exemption is limited to marriage opportunities only, before or after the gift will come under tax.
- This provision is valid only for the bride and groom, not for other family members.
For example, if a friend has given a gift of ₹ 5 lakh to the groom on the wedding day, then it will remain tax-free. But if the same friend gives a gift of ₹ 1 lakh to the groom’s father, then he can be considered taxable.
Which gifts come under the scope of tax?
Separate from the occasion of marriage, if a person takes a gift of more than ₹ 50,000 and that person is not a close relative, he may have to pay tax as a gift income. The definition of relatives includes parents, siblings, grandparents, in-laws, husband-wife, son-daughter and their spouse.
According to CA Abhishek Soni, valuable gifts like stocks, jewelry, land, houses or vehicles are also involved in tax exemption, provided they have met the groom or bride on the occasion of marriage.
Details have to be given in ITR
Even though the groom-groom does not get under the purview of the gift tax at the wedding, the tax experts recommend that the details of the big price gifts be given in the Income Tax Return (ITR). This provides comfort in the calculation of capital gains tax while selling property in future.
Why is caution necessary?
The Income Tax Department is cautious about monitoring gift income for the last few years. In the name of tax free gift, showing unaccounted cash or property can fall under the category of tax evasion. According to CA Abhishek Soni, not giving information about tax worth tax in his ITR may be fined. This can be up to three times the amount of gift.
Therefore, all gifts of more than Rs 50,000 should be disclosed in a financial year, which are taxable under Section 56 (ii) of the Income Tax Act. It would be a wise step to keep the correct record of all gifts and take advice from a tax specialist if needed.
Also read: Explainer: How will the salary of up to ₹ 14.65 lakh be tax free in New Tax Regimm? Understand complete calculation