According to the Indian Income Tax Act, Mukesh will have to pay tax on the Rs 1 crore he received as a gift from Amit Sehra. In fact, if someone receives a gift of more than ₹ 50,000 in a financial year from a non-relative (such as a friend, colleague or acquaintance), then that gift comes under the purview of tax. Yes, if this gift is received from parents, siblings, spouse or children, then no tax has to be paid on it. They are considered “relatives” in income tax rules. That is, gifts received from close family members are completely tax-free.
How much tax will have to be paid?
According to the Income Tax Act, Mukesh will have to pay tax on Rs 1 crore received from Amit as per his tax slab. It is necessary to give information about such gifts while filing Income Tax Return (ITR). If you do not do this, the tax department may consider it as hidden income. Gift is not taxed separately, rather it is added to your ‘Income from Other Sources’. Then you have to pay tax accordingly by combining it with your gross income. That is, if you fall in the 20% tax slab, the same amount of tax will be charged on the gift amount.
If you receive cash, cheque, bank transfer, car, jewelery or property as a gift, and its total value is more than ₹ 50,000 in a financial year, then tax has to be paid on the entire amount. That is why the Rs 1 crore received by Mukesh will be considered as Mukesh’s income and tax will be levied on it.
