Diwali is quickly approaching. On Diwali, everyone enjoys giving and receiving gifts. Gifts come in many forms, including money, candy, clothing, and gold ornaments. Giving extravagant gifts on Diwali, such as cars and real estate, is also considered lucky. Even the business offers bonuses to the staff members during Diwali in the form of presents. If you have ever received a gift or bonus or are planning to in the future, you must know the applicable tax regulations. Understanding the tax rules for any gift, bonus, or financial giving is crucial.
Gifts received during a financial year may be subject to taxation as "income from other sources" at the slab rate under section 56(2) of the Income Tax Act. Gifts from close relatives are exempt, though. Although the Diwali gift largely depends on the giver. Gifts received by the taxpayer are subject to taxation under section 56(2)(x) of the Income Tax Act of 1961. These donations are included in the taxable gifts.
No tax on the car
According to the Income Tax Act, everything with a value greater than Rs 50,000 qualifies as an asset, including shares and stocks, jewelry, archaeological collections, paintings, sculptures, and metals. The automobile, however, is not considered property. Consequently, gift tax may not apply to the car.
Tax exemption on gifts received from them
According to the Income Tax Act of Section 56, gifts from family members are not subject to taxation. The Income Tax Act states that a person's spouse, brother, sister, brother-sister, brother-in-law, sister-in-law, maternal uncle and uncle, siblings of a parent, persons with whom blood is connected, or people with whom a person's spouse has blood they fall into the group of relatives, regardless of the relationship. These people do not charge taxes on any gifts you receive from them. However, because friends do not fall under the definition of a relative, the gifts they give are taxed.
These things are taxed
Any immovable property, such as land, a building, etc., with a stamp duty of more than Rs. 50000, as well as any other expensive items, such as jewelry, shares, artworks, or other items costing more than Rs. 50000, are included.