Many are happy to give gifts on Diwali, but please take a look at the tax rules too!

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Income tax rules on Diwali gifts India: The festival of Diwali is incomplete without happiness, sweets and gifts. Bonus received from office, gift received from friends or omen received from relatives, all these add more to the charm of the festival. But do you know that these gifts received with love can also be subject to income tax scrutiny? Yes, as much as it feels good to give and receive gifts, it is equally important to know the tax rules related to them, otherwise, you may get troubled by the notice of Income Tax Department later. So, let us understand in simple language which gifts received on Diwali are taxable and which are not. 1. Gift received from the company (Employer) On Diwali, most of the companies appreciate the hard work of their employees by giving them gifts or bonuses. When is it tax-free? If gifts received from your office (like any item, gift voucher or token) are given throughout the year. If the value of the gift is more than ₹5,000, then the entire amount will be considered as part of your salary and you will have to pay tax on it as per your tax slab. For example, if you receive a gift worth Rs 7,000, the entire Rs 7,000 will be taxable, not just the additional Rs 2,000. 2.Gifts received from relatives This is the best news! There is no tax on any gifts you receive from your relatives, no matter how valuable they are. According to income tax rules, gifts received from these relatives are completely tax-free: Spouse (husband or wife)Brother or sisterParents Children or grandchildren 3.Gifts received from friends or other peopleThe same tax rules apply to gifts received from friends and distant relatives. If the total value of the transfer (be it cash or goods) is up to ₹50,000, then you do not need to worry. When will the tax be levied? But as soon as this limit crosses ₹50,000, you will have to pay tax on the entire amount received. Suppose, you receive total gifts worth Rs 55,000 from different friends, then this entire amount will be counted in ‘Income from Other Sources’ and will be taxed as per your tax slab. Therefore, this Diwali, when you exchange gifts, keep these small things in mind, so that the sweetness and happiness of the festival remains forever.

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