Case breakdown: Movie Sharaabi
Amitabh Bachchan (Vicky Kapoor) had gifted Jaya Parda, his love interest, Rs. 9 lakh necklace. Even though she wanted to return it to him as it was very expensive, her necklace was stolen before she could do that. Seeing her cry, Vicky Kapoor lies and says that the necklace was not a real one, it was a fake. He tries to convince her by saying, if he would have gifted her such an expensive necklace, he would have to pay tax on that.
What is Gift Tax?
If the value of the tohfa (gift) exceeds Rs. 50,000, but wait; if this gift is given by your relative then you can breathe a sigh of relief as it won’t be taxable. Vicky Kapoor (Amitabh Bachchan) is right and he would be taxed as the amount of jewellery gifted exceeds Rs. 50,000.
You might think even your bua’s dadi’s son’s daughter is your relative. Don’t worry too much about who’s your relative. Income tax department clearly defines who your relatives are.
A relative according to section 2(41) of Income tax are as follows:
- Husband or wife i.e. Spouse of the individual
- Brother or sister of the individual
- Brother or sister of spouse of the individual
- Brother or sister of either of parents of the individual
- Any lineal ascendant or descendant of the individual
- Any lineal ascendant or descendant of spouse of the individual
Any sum of money or property received is not taxable on the occasion of marriage of an individual (I wonder what it promotes).
Also any sum of money or property that is received under a will or by way of inheritance is also exempt from tax. Amount received from a local authority, fund, foundation, educational institution too shall not be taxable.
Written by: Gitika Chandra