So all the gifts received by the bride and groom, irrespective of value, are tax free in their hands but the other relatives have to include full value of the gifts in their income, whether received in cash or kind, in case the aggregate of value of all the gifts, including these gifts, received during the year exceeded fifty thousand rupees. These gifts need not necessarily be from the relatives only to enjoy this exemption. The gifts received by the couple are fully tax free without any upper limit. It is only the couple getting married who enjoys the exception and not all the relatives. Are all these gifts covered under the marriage exception, and therefore tax free? The answer is simply no. In India we have tradition where relatives as well as the bride and groom receive gifts on the occasion of marriage. Marriage gifts are one of the exceptions provided in the law. While providing for taxation of gifts in the hands of recipient, the lawmakers provided certain exceptions. Specific provisions applicable to marriage gifts It is the aggregate value of all the gifts received during the year and not the value of an individual gift which is to be taken into account for determining taxability of the gifts. Presently this threshold limit is fifty thousand rupees. This lacuna was grossly misused and which forced the government to bring in provisions to tax the gifts in the hands of the recipient in case the aggregate of the all the gifts during a year exceeded certain threshold limit. After the abolition, neither the recipient not the donor was subjected to any tax. General Provisions for taxation of Gifts in Indiaīefore abolition of the Gift Tax Act in 1998 the donor (giver of the gift) was required to pay gift tax on the value of gift over Rs. This article deals with tax implications of such gifts received. Furthermore, if you’re giving gifts to the same individual, you can combine the wedding gift allowance with any other allowance, except for the small gift allowance.It is customary in Indian for families to exchange gift at the occasion of marriage. You can give up to £5,000 to your child, £2,500 to a grandchild or great-grandchild, and £1,000 to any other person, all without incurring inheritance tax. Wedding gifts are also granted specific tax-free gift allowances. It is worth noting that if you don’t fully use the exemption in a given year, the unused portion can be carried forward to the following tax year, but only for one year. You have the flexibility to give this entire amount to one person or divide it among several recipients as separate gifts. However, keep in mind that this allowance cannot be used if you’ve already utilised another allowance for the same individual.Īn annual exemption is also granted allowing the gifting of up to £3,000 per tax year, which won’t be considered part of your estate value. Anything given more recently will be taxed at the usual rate of 40 per cent.Īgain, spouses or civil partners are not subject to tax on gifts exchanged between them, regardless of the amount.ĭuring each tax year, you can also take advantage of the small gift allowance, which permits you to give multiple gifts of up to £250 per person, without incurring inheritance tax. However, if you pass away within three to seven years of making a gift and inheritance tax is applicable, then tax will be due on a sliding scale called “taper relief”.
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