After Dhanteras and Diwali, India is all set to celebrate Bhai Dooj on Nov. 11, a major Hindu festival that celebrates the bond between brothers and sisters. To mark this day, many siblings also plan to give each other cash, gold or other financial assets. However, before making or receiving these gifts, you should check out the tax implications.
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While receiving gifts from brothers and sisters are generally tax-free in India, rules change when cousins get involved. So, if this Bhai Dooj, you are planning to give monetary gifts, you must understand these tax implications.
Gold, Money And Real Estate From Brother
In India, gifts received from your brother on the occasion of Bhai Dooj are completely tax-free, irrespective of their value. Under Section 56(2)(x) of the Income Tax Act, 1961, gifts received from specified relatives are exempt from tax. A brother is included in the definition of a relative.
This means that if your brother gifts you cash, jewellery, a mobile phone, a car, or any other asset, the gift is not taxable in your hands. This is true even if the value of the gift exceeds Rs 50,000.
Gifts From Cousin Brother
As per the rules, gifts received from maternal or paternal cousins are not exempt from tax if their aggregate value exceeds Rs 50,000 in a financial year. This means that any gift with monetary worth up to Rs 50,000 remains tax-free. However, if the value exceeds this limit, the entire gift becomes taxable under “income from other sources”.
Exemption only applies to “specified” relatives which includes parents, siblings, spouse, direct lineal ascendants/descendants and siblings of parents like an uncle or aunt.
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Still, you must understand that the tax implication on receiving gifts from cousins on Bhai Dooj is different from that on your marriage. Gifts become fully tax-free even if received from extended or non-relatives. However, any income generated after the wedding from those gifts (such as interest, rent, or capital gains) is taxable.
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