Income Tax Latest Update: As the festive season has started and Diwali is just around the corner, employees are likely to get gifts and company bonuses. The festival of lights brings financial gains for many employees. However, it should be noted that such financial gifts and bonuses are taxable, as per India’s income tax laws. Monetary gifts are also subject to taxation.Also Read – With This Post Office Scheme Your Amount Will Be Doubled; Details Inside
As per the guidelines from the Income Tax department, any amount of money received without consideration (in exchange of a receipt or anything of value), can be termed as ‘monetary gift’. Moreover, the specified movable properties received without consideration, can also be termed as ‘gift of movable property’. Also Read – 7th Pay Commission News: Haryana Announces Diwali Bonus, Hikes DA by 4% For Govt Employees. Calculate Revised Salary Here
Moreover, the monetary gift that includes cash, cheque, draft will attract income tax if these exceed Rs 50,000 in a year. Also Read – Bumper Diwali Bonus Announced For Kalyan-Dombivli Municipal Corporation Employees. Deets Here
When gifts will not be taxed?
However, exceptions are given to cases when the monetary gift received by an individual or HUF is not taxable. These gifts include money received from relatives such as spouse, brother or sister of the individual, brother or sister of the spouse of the individual
Moreover, the gifts received on the occasion of marriage of the individual is not subject to tax. Apart from marriage, no other occasion is there when monetary gift received by an individual is not charged to tax.
When gifts will be taxed?
The taxpayers must note that the monetary gift received on occasions like birthday, anniversary will be subject to tax, according to the Income Tax department guidelines.
However, the taxability of the gift is determined on the basis of the aggregate value of gift received during the year and not on the basis of individual gift. So in this case, if the aggregate value of gifts received during the year exceeds Rs. 50,000, then total value of all such gifts received during the year will be charged to tax.
What about Diwali bonus and gifts from company?
Gift vouchers of more than Rs 5,000 will be considered as part of your salary and will be taxed as per the applicable tax slab under Income Tax guidelines.
Any monetary gifts credited to your account by the company will be considered a part of salary and will be taxed. It means the Diwali bonus from the company, if any, will be taxable.
Any cash gift received from the company, even if it is below Rs 5,000, will be subject to tax. However, Rs 4,999 in the form of a voucher or coupon will not be subject to tax under IT rules.