new Delhi. In India, there is a trend of giving gifts on every occasion. Whether it is a wedding or a festival or on other occasions, gifts like money, gold and silver, diamonds, shares of companies, land are given and taken. However, while giving an expensive gift, there remains a fear that you may not get caught in the affair of the Income Tax Department.
According to income tax rules, gift up to Rs 50,000 in a financial year is exempt from tax. However, if you receive a gift worth more than this, then the entire gift becomes taxable. Income tax on gifts is not levied on a single gift, but it is applicable on the total gifts received in a financial year.
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Question- My father’s HUF (Hindu Undivided Family) wants to give me a gift of Rs 10 lakh. Do I have to pay tax on this gift? If I have to pay tax, are there any other options to take money from HUF?
In response to this query, tax and investment expert Balwant Jain while talking to Mint said, “Any distribution of its income by HUF to its members is fully exempt. In my opinion the exemption is available to the extent of income of the current year and not the distribution made by the HUF out of its assets or past income. Gift received by the members from HUF is not tax free in the hands of the recipient members. Gift from HUF to its members is not covered under the exception provided under section 56(2) of the Income Tax Act. The gift you received from your father’s HUF will be included in your income and you will have to pay tax at the applicable slab rate.
Jain further added, “Since the gift given to you by the HUF of the father is equivalent to a partial partition and is not recognized under the Income Tax laws, the income earned by you on such gift is clubbed with the income of the HUF Will continue to go Alternatively, you can take interest bearing loan from your father’s HUF.
Tags: income tax, income tax department
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