Tax On Diwali Gifts: Will you have to pay tax on the gifts received on Diwali? know here...

It is a tradition to give gifts to your near and dear ones on the occasion of Diwali. The value of the gift sometimes depends on the depth of the relationship. Companies also give gifts to their employees on the occasion of Diwali. But do you know that these gifts and bonuses can put an additional burden on your pocket? Yes, under the Income Tax Rules, you may have to pay tax on them. Gifts and bonuses received from the company bring not only happiness but also tax liability.

According to the Income Tax rules, if the value of your Diwali gift exceeds a certain limit or if your bonus is above some fixed limit, then you may have to pay tax on it. That is, this Diwali gift can bring happiness to you, but at the same time it can also add the burden of tax.

When is gift tax levied?
Under Section 56(2)(x) of the Income Tax Act 1961, tax liability arises on gifts received by the taxpayer. However, not all gifts received by a person in India are subject to tax. The key provisions of the Income Tax Act, of 1962 allow you to receive various tax-free gifts. If you have received a gift of up to Rs 50,000 in a financial year, then no gift tax will have to be paid on it. Income tax on gifts is not levied on a single gift, but it is levied on the total gifts received in a financial year.

Gifts received from these people are not taxable.
Gifts received from a spouse, brother or sister, and other close relatives are not taxable.

Property received as a gift through inheritance or will.

Gift received from any member in case of Hindu Undivided Family.

Gift received from Panchayat, Municipality, any foundation, university, religious institution, and educational institution.

When is a gift received from a company tax-free?
A gift up to Rs 5,000 received by a salaried person from his company in a financial year is tax-free, but if this value exceeds Rs 5,000, then the additional amount will be considered as income from your salary, and income tax will have to be paid on it.