Recently, the Central Board of Direct Taxes (CBDT) has exempted buyers from gift tax when they acquire equity shares in public-sector units (PSUs) through strategic disinvestment.
About Gift Tax:
- The Parliament of India introduced the Gift Tax Act in 1958, and gift tax is essentially the tax charged on the receipt of gifts.
- The Income Tax Act states that gifts whose value exceeds Rs.50,000 are subject to gift tax in the hands of the recipient.
- The gift tax is also applicable on certain transfers that are not considered a gift.
- The transfer of existing movable or immovable property in money or money’s worth qualifies for gift tax.
- The gift is exempted from tax if it was given by a relative.
- The income tax rule Parent, Spouse, Siblings, Spouse’s siblings, Lineal descendants Lineal descendants of the spouse can be considered as a relative
- There are several other situations where gifts can be exempted from tax. Listed below are other situations in which the gift will be exempted from tax.
- Gifts received during weddings are usually exempted from tax.
- Gifts received as part of the inheritance are exempted from tax.
- Cash or rewards received by local authorities or educational institutions based on merit is exempted from tax.