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Tax-Exempt Gifts from Non-Relatives
When Gifts from non-relatives are tax-exempt
Gift is something which not even a wealthiest person can deny. We all know that Gifts from relatives are Tax-Exempt but certain gifts received from non-relatives are also Tax-Exempt.
Read: Taxability of Gifts under section 56(2)
Situations when gifts from non-relatives can also be Tax-Exempt:
Cash gifts received from any person of any amount less than Rs.50,000 will be Tax-Exempt even it is from stranger. Remember even a rupee exceeding the limit will put the whole money under purview of tax. Say you received Rs.40,000 from your friend this will not be taxable but if you received Rs.60,000 then the whole Rs.60,000 will be taxable not Rs.10,000 which exceeding threshold limit.
On Marriage or such Occasions
Any gift received from any person including non-relative on the occasion of marriage or any other such ceremonial occasions would not be liable to income tax at all. The catch in this clause is the date of amount received. The date should not be too early or too late from the date of occasion.
Any amount or asset received on the death of person as a part of the inheritance is fully exempted from Income Tax even it is from non-relative. For instance, someone has no relative and gives his all wealth to a friend, then that friend will not be liable to tax. But the onus to prove the assets were given under inheritance is upon the friend.
Also in case of trust, asset transfer from a Trust should be as inheritance or it will become taxable.
On Contemplation of Death of Donor
If someone has fallen sick with fatal disease which can’t be cure or has taken salvation, in this case all the assets transferred to any person even to non-relative will be Tax-Exempt.
From Public Charitable Trust, Institution or Local Authority
Any Financial help received by anyone from Trust registered under section 12AA or Institutes registered under section 10(23C) of Income Tax is full exempted. Several NGO provides free education or medical help to individuals, no tax will be charged on the amount of help received from these institutes. Thus, scholarships, stipends or charities received from a charitable institution would be completely Tax-Exempt.
Even any fund received from any local authority is also Tax-Exempt.
Supporting Documents for Gift Transactions:
Cash gifts do not require any gift deed or stamp paper, just a normal letter having signature of donor and donee will suffice the matter.
In case of movable property, stamp paper is to be made and stamped by notary or court. Registration of gift deed is not required.
In case of immovable property, the transaction should be executed through the gift deed which later on need to be registered else the title will not be passed to the donee under the law.
