What is Gift Tax?

About Gift Tax:

• The Parliament of India introduced the Gift Tax Act in 1958, and gift tax is essentially the tax charged on the receipt of gifts.
• The Income Tax Act states that gifts whose value exceeds Rs.50,000 are subject to gift tax in the hands of the recipient.
• The gift tax is also applicable on certain transfers that are not considered a gift.
• The transfer of existing movable or immovable property in money or money's worth qualifies for gift tax.
• The gift is exempted from tax if it was given by a relative.
• The income tax rule Parent, Spouse, Siblings, Spouse's siblings, Lineal descendants Lineal descendants of the spouse can be considered as a relative
• There are several other situations where gifts can be exempted from tax. Listed below are other situations in which the gift will be exempted from tax.
  • Gifts received during weddings are usually exempted from tax.
  • Gifts received as part of the inheritance are exempted from tax.
  • Cash or rewards received by local authorities or educational institutions based on merit is exempted from tax.

 

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Q1) What is Taxation?

Taxation is the process by which governments impose charges on individuals, businesses, or other entities to generate revenue. Taxes are used to fund government activities and public services such as infrastructure development, healthcare, education, defense, and social welfare programs.

Source: strategic disinvestment push: Buyers of PSU shares exempt from gift tax