Before you start exchanging or planning your gifts this festive season, take in consideration your tax liabilities as well. From gold and silver coins to cash all are taxable under the Income Tax Act and have to be declared under ‘income from other sources’.
If the aggregate value of all gifts received during a year exceeds Rs 50,000, it is taxable under the Section 56(2) of the Income Tax Act. In case of cash if there is no promise of goods and services attached then the cash is considered a 'gift' and has to be reported for taxation purposes. In the case of jewellery and shares, the fair market value of such items is also chargeable to tax.
Income Tax department states that gifts from 'family' can be exempted. Brother or sister, brother or sister of the spouse, brother or sister of either of the parents or parents-in-law are all considered 'family' as per the definition under the IT act.