The wedding season is here and people across India are preparing to celebrate. Indian weddings are known for grand celebrations, opulence and elaborate rituals spanning multiple days. Indian weddings are a symbol of grandeur, encompassing lavish decorations and grand feasts.
However, the financial implications could be significant due to the amount of money and valuables involved. Gifts form a prominent part of Indian weddings due to cultural practices and regional traditions.
Wedding gifts are usually in the form of cash, gold and other valuables. Families of both the bride and groom also exchange gifts.
With all the gifts received during the marriage, it is important to understand the financial implications. Couples must plan how to manage cash gifts, which can help them build a strong financial foundation for their future together. It is equally important to understand the tax implications of these gifts. This will help avoid unexpected tax liabilities and make informed decisions about using or investing the gifts.
How Wedding Gifts Are Taxed In India?
According to tax laws, any gifts received from certain specified relatives in a financial year are tax-free. These include gifts from parents, siblings, spouse, in-laws, or lineal ascendants or descendants.
As per the existing rules, gifts received from people other than these specified relatives are taxable if the total value of the gift exceeds Rs 50,000 in a financial year. This includes gifts received from friends and non-relatives. These gifts can include gold, jewellery, shares and immovable properties.
Gifts surpassing the exemption limit in value in a financial year are taxable and need to be disclosed under ‘Income From Other Sources' in ITR filing.
However, tax laws recognise wedding gifts as an exception. So, gifts received during a wedding are fully tax exempt, irrespective of their total value. These gifts include all the cash and valuables received from relatives, non-relatives and friends.
“Gift received on the occasion of the marriage of the individual is not charged to tax. Apart from marriage, there is no other occasion when a monetary gift received by an individual is not charged to tax. Hence, monetary gifts received on occasions like birthdays, anniversaries, etc., will be charged to tax,” as per the Income Tax Department.
While filing your income tax returns (ITRs), make sure to fully disclose the gifts' value and submit the necessary documents to avoid any income tax notice later.
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