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Gift up to Rs 20 lakh is not taxable income: The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has said that there will be no tax on gifts up to Rs. 20 lakh. Describing this decision as historic, the ITAT said that the Indian tax law provides for exemption to taxpayers on gifts received from relatives.
Under the Income Tax Act, any cash gift of more than Rs. 50 thousand from any relative is classified under the category of income from other sources. On which tax is deducted as per the prescribed rate of income tax. However, in many cases, property received as a gift, marriage or inheritance from a personal relative is tax exempt.
Cash gift up to Rs 20 lakh tax free
Under Section 56 (2) (x) of the Income Tax Act, the gift given to the brother is exempt from tax. The Income Tax Appellate Tribunal, while giving its verdict in a tax exemption case against a person named Salam, has declared cash gifts up to Rs 20 lakh received from abroad as tax free. Salam received a cash gift from his brother, which was taxed. Challenging this, the Income Tax Commissioner has justified this decision, saying that the taxpayer has failed to prove that Salam received this amount from his brother. Later he appealed to the ITAT. In which he presented evidence that his brother had given him the money as a gift while living in Dubai. His brother has been living in Dubai for the last 25 years, where he runs a business.
ITAT gave an important decision
During the appeal, the petitioner said that his brother had transferred this amount to Bank of Baroda, ICICI Bank through three cheques. In which he also presented his brother's bank statement, passport and investor class visa. This gift was given to him on 26 August 2022. ITAT member Prashant Maharishi decided on the basis of all the evidence that Salam received Rs. 20 lakh is non-taxable income.