Generally, gifts are taxed in the hands of the receiver under the head of “income from other sources”, but as well know that in India, it is a ritual of giving gifts to each other on the occasion of a wedding. Income tax authorities have given a relief, tax exemption on receiving gifts at weddings. It means you, as a receiver, don't have to give any tax on the gift you received at your wedding.
But, everything comes with a condition especially when it is from the side of government authorities. Let’s understand a few points related to wedding taxation that you need to know to utilise your wedding gifts efficiently.
Gift by parents
If you, as a newlywed couple, received any gift bet it in kind or cash, from your immediate family, it will be exempted from the tax. Immediate family includes any of the immediate family of the bride and groom, where immediate family means:
- Siblings or
- Any of their siblings' spouses, or
- Siblings of their parents.
Cash to be deposited
The gift you receive from your friends will also be exempted from the tax regardless of the sender. But, you need to deposit such cash in your respective bank accounts around the date of the wedding. If you forget to deposit money in your bank account, you will be liable to pay tax on such an income when you deposit the same.
Immovable property as a gift
As we all now know that anything received from your parents or immediate family members will be exempted from the tax be its immovable property. But, if you have received any immovable property from an unrelated person, or we can say friend, you will have to pay tax as stamp duty up to ₹50,000.
Deed registration of high-value gifts
Like you need to deposit cash received at your wedding have to be deposited near the date of your wedding, and high-value gifts like cars, and horses, must be registered with a gift deed near the date of the wedding. Unless you need to pay tax on such high-valued gifts.
Income from wedding gifts
It is important to note that you will only be exempted from paying tax on the gifts received at your wedding. Any income arising from your wedding gifts would be taxable in a regular manner. For example, if you have ₹5 lakhs as a wedding gift and you have invested it in fixed-income securities. The interest would be taxable as per your slab rate.
Lavish weddings in India are a source of pride for many. It is considered a significant event for the finances of the families. After looking at the trend of lavish weddings, the government has come up with a bill in which you need to contribute 10% of the money you spent on your wedding toward the poor girls in the country if you are spending more than ₹5 lakhs. Spend however you want, it’s your big day, but keep your responsibility towards society a priority as well.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com