Is there a limit in income tax laws up to which a father can gift to his son
Father and son are covered under the definition of “specified relatives". So, a father can give any amount of gift to his son without any tax implications
Can one give a gift to his son for purchase of a flat and if one can, are there any limit for such gift under the tax laws?
According to a report in LiveMint, under current tax laws there are no boundation on giving gifts to any person. Whereas, in certain circumstances the clubbing provisions apply in regard to income derived by the person receiving from the gifts. In matter for gift given to daughter in law and one’s spouse, the income accruing due to the asset transferred is required to be clubbed in the hands of the person giving the gift.
According to the report, as far as the tax at the time of making the gift is concerned, as per the tax laws in India, a gift received by a person, generally becomes taxable in a person's hands in case the aggregate of all the gifts received by the person during a year exceeds fifty thousand rupees. As far as sum of all the gifts received during a year does not exceed the threshold of fifty thousand rupees, it is fully exempt but the entire amount is taxable once it crosses threshold of fifty thousand.
Meanwhile, there are certain exceptions to the rule of gifts becoming taxable in the hands of a recipient. One exception is in respect of gifts received from certain specified relatives. Father and son are covered under the definition of “specified relatives".
So, a father can give his son a gift worth any amount without any tax implications for both.
It is important to mention that as per the current tax laws, in case a person accepts any gift beyond Rupees two lakhs in cash, they may become liable to a penalty equal to the amount of gift accepted in cash.
So avoid accepting gifts beyond two lakhs in cash.
Published: 16 Oct 2021, 1:29 PM