Yaaayyyyyyyy Diwali is here đȘđ€©âš
Hope the festival of lights has brought your way bright sparkles of prosperity, happiness and a whole lot of giftsâŠâŠ
The exchange of gifts in this festive season, is a cherished tradition. But did you know these gifts can have different tax implications? Let us dive into the details:
đ Gifts from Relatives:
* Gifts from specified relatives like parents, siblings, and grandparents are entirely tax-exempt, regardless of their value. These heartfelt gifts are considered expressions of love and are not subject to income tax. For example, if you receive a Diwali gift worth Rs. 1,00,000 from your parents, it is entirely exempt from taxation.
đ Gifts from Friends & Colleagues:
* Gifts received from non-relatives, including friends and colleagues, are taxable if the aggregate value of such gifts exceeds Rs. 50,000 during a financial year. This includes cash or kind gifts like jewelry, electronics, home appliances, and even vouchers and gift cards.
* Letâs break it down with examples:
* Example 1: If you receive a cash gift of Rs 60,000 from your friend on Diwali, the entire amount is taxable as it exceeds Rs. 50,000.
* Example 2: If you receive a gold bracelet worth Rs 40,000 from your colleague on Diwali, you wonât have to pay any tax on it. However, if another colleague gifts you a Bluetooth speaker worth Rs 15,000, youâll need to pay tax on the full Rs 55,000 as it exceeds Rs. 50,000.
đ Gifts from Employers:
* Gifts received from an employer fall under the âIncome from salaryâ category. However, thereâs an exemption of up to Rs. 5,000 in a financial year on gifts received from an employer.
* Example: If you receive a cash gift of Rs 4,000 from your employer on Diwali, you wonât have to pay tax on the gift. But if you receive a cash gift of Rs 6,000, youâll be liable to pay tax on Rs. 1,000 as it exceeds the exemption limit.
đŒÂ Gifts in Business:
We would like to invite your attention towards Section 194R of the Income-tax Act, this section talks about applicability of TDS on benefit or perquisites.
During Diwali time, companies/ businesses gifts gold coins, foreign trips, motor vehicles to their agents, channel partners or associates.
On such gifts there is a mandate for TDS deduction @ 10% under Section 194R. As these gifts are allowable expense for the company / businesses and this is corresponding income for the recipient of these gifts.
Though, these gifts are in non-monetary form but recipients have to disclose such gifts as their income at the time of filing ITR.
It is one of the new section in Income tax and relevant for Diwali gifts !!
* Businesses giving gifts should be aware of Section 194R, which requires tax deduction when the value of the gift given exceeds Rs. 20,000. In such cases, TDS at a rate of 10% is deducted from the gift recipient.
* Example: If ABC Industries gifts a TV worth Rs 1 lakh to their top dealer, Mr. B, on Diwali, they must deposit a TDS of Rs. 10,000 to the government.
Itâs crucial to maintain records of the gifts you receive, especially if they have significant value, to comply with tax regulations.
Itâs essential to maintain records of the gifts you receive, especially if they have a significant value, to comply with tax regulations.
Share this with your near ones to spread awareness about Diwali gift taxation and help everyone have a joyful and stress-free celebration! đđŒđ€