The tax department has willy-nilly become a party-pooper bang in the middle of Indias month-long festive season, characterised by indulgences in food, festivity and gifting. The Central Board of Direct Taxes (CBDT) has given effect to the budget declaration to tax all gifts in kind worth over Rs 50,000 from October 1, the apex body on direct taxes said on Wednesday.
Any such gift, including real estate, cars and diamond jewellery, will attract income tax from Thursday. Till now, income tax was levied only on cash gifts above Rs 50,000.
Budget 2009-10 has brought all gifts in kind into the tax net. Cash gifts above Rs 25,000 are being taxed since April 1, 2004. The floor was raised to Rs 50,000 effective April 1, 2006.
Any person who receives a gift of any such property on or after October 1, 2009, must pay income tax due on the value of the gift and disclose the taxable value of such property in the return of income for assessment year 2010-11 and subsequent years, said the CBDT statement.
However, gifts from a relative, on the occasion of marriage, under will or by way of inheritance, in contemplation of death of donor, from any local authority, or from any fund or trust would be exempted from tax. Spouse, siblings, spouse/parents siblings and any lineal ascendant or descendant are defined as relatives under the Income-Tax Act.