I received gifts during my wedding are they taxable?
Gifts received during a wedding by a newly-wed couple are tax exempt if the immediate family of the couple gives them. The immediate family may constitute of couple’s parents, siblings or siblings of their parents. For instance, if your parents transfer Rs. 10,00,000 to your bank account as a wedding gift, then you will not be charged any tax on that amount as they are your lineal ascendants.
The gifts received by the newly-wed couple can be taxable if they have been presented by any individual or entity who is not directly related to the couple. The gifts are also taxable if their monetary value is more than Rs. 50,000. For instance, if all your friends give you gifts worth Rs. 45,000 combined, you will not be charged with any tax. However, if the amount exceeds Rs. 50,000, then the whole amount will be subject to tax based on the slab rate associated with ‘income from other sources’.
However, if the newly-wed couple received a present in the form of immovable property, the stamp duty will attract tax up to Rs. 50,000 as stated under Section 56 of the Income Tax Act.
Income Generated from the Wedding Gifts
While the gifts received at the wedding by a newly-wed couple are exempt from taxes, the income generated through these gifts is not. For example, if the couple has received property as a present and they have let it out, the income earned through that property is taxable. In case the couple decides to sell that property in future, the capital gain due to it will also be taxed.
To make the most out of the tax exemptions allowed, married couples must maintain documentation for all the valuable gifts acquired at the time of the wedding, as income tax proof. By keeping a list of presents and assets, you can provide proof of legal ownership. The record can help you in avoiding tax scrutiny in later years.