Receiving pricey diwali gifts from your non-relatives will attract taxes

This Diwali you may both receive and give out gifts. When the value of the gifts is considerable, the government sometimes regards them as income for the recipient. This makes it imperative that we understand the rules relating to taxation of gifts.

Section 2 (24) of the Income-Tax (I-T) Act deals with gifts received that will be treated as a person’s income, while Section 56 (2) deals with both the taxation and exemptions on them.

Cash: A gift of up to Rs 50,000 can be received even from a non-relative without it attracting any tax liability. Says Aditya Chopra, managing partner, Victoriam