When Is It Legal to Give Money as a Gift in India?
Yes, it is legal to give money as a gift in India. There is no restriction on the amount of money that can be given as a gift, although gifts exceeding a certain amount may be subject to taxation under Indian tax laws.
The Income Tax Act, 1961, does not specifically deal with the taxation of gifts. However, gifts are considered to be income from other sources under the Act. This means that any gift received by an individual or a Hindu Undivided Family (HUF) from any person or source is taxable if the aggregate value of such gifts received during the year exceeds Rs. 50,000.
There are certain exceptions to this rule. For example, gifts received from relatives, such as parents, siblings, spouse, and children, are not taxable. Gifts received on the occasion of marriage are also not taxable, irrespective of their value. Gifts received from local authorities or any recognized religious or charitable organization are also not taxable.
If the value of gifts received during the year exceeds Rs. 50,000, the recipient is liable to pay tax on the excess amount at the applicable income tax rates. The tax is payable by the recipient, and not by the donor.
It is important to note that the gift tax provisions in India are complex, and there are many exceptions and nuances