All of us enjoy receiving gifts from friends and relatives on weddings, birthdays, etc. But many people do not realise that some gifts ? whether in cash or kind ? may have tax implications.

Taxable gifts

As per the Income-tax Act, 1961, an immovable property received by an individual or a Hindu Undivided Family (HUF) is considered a taxable gift in the recipient?s hands if its stamp duty exceeds R50,000 and the same is received without any consideration. The stamp duty value of such a property will be the taxable value of the gift.

In case of moveable property, the category of taxable gifts consists of shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, work of art or bullion. Gift of any of these moveable properties is considered a taxable income for the recipient if the same is received without consideration and the total fair market value of the property is more than R50,000.

Even in cases where there is a consideration, if the same is less than the total fair market value of the moveable property, then tax will be levied on the differential amount exceeding R50,000.

Tax-exempt gifts

Fortunately, not all gifts are taxable and the IT Act offer certain exceptions based on the category of the recipient and the occasion or type of gift.

Gifts from relatives: Gifts received from any relatives specified under the tax laws are not taxable. Relatives include spouse, brother or sister of the individual, brother or sister of the spouse of the individual, brother or sister of either of the parents of the individual, any lineal ascendant or descendant of the individual, any lineal ascendant or descendant of the spouse of the individual and the spouse of the persons referred above.

Gifts received on marriage: Any gift received by an individual on marriage is not taxable. The gift on the occasion of marriage could be of cash or property and the value could be of any amount. Also, the gifts received from non-specified relatives on the occasion of marriage are not considered taxable.

Gift at certain other events: Any gift received under a Will or by way of inheritance, or in contemplation of death of the payer is not taxable.

Additionally, there are some more instances where gift is not taxable.

Provisions under DTC: At present, there appears no significant difference between IT Act and the proposed Direct Taxes Code (DTC) in terms of gifts that are not liable to tax. DTC also provides exceptions on the amount received from relatives or on marriage or by inheritance, etc.

Hence, gifts received on marriage even in the DTC era will not be liable to tax. However, it would be important to review the final provisions of DTC when it is implemented.

The author is a director with KPMG. The views expressed are personal