Know Income Tax Rules on Gifts Received on Marriage

During most Indian marriages, the married couple receives a lot of gifts from friends as well as families. There can be tax implications on such gifts.

In this article, we will understand what the income tax rules are on gifts received on marriage.

Newly married couples receive a variety of gifts, such as cash, jewellery, stocks, etc. during their wedding. Such gifts can have tax implications.

Income Tax Rules on Gifts Received on Marriage From Immediate Family Members

In case a newly married couple receives gifts from immediate family members, then it can be tax-exempt. Irrespective of the value of the gift, if it is received from an immediate family member, such as parents, siblings, spouse’s siblings, or the parents’ siblings, then it will be tax-exempt.

For example, if the groom’s parents transfer Rs. 5 Lakhs to the groom’s account as a gift on the occasion of the marriage, then the groom will not have to pay any tax on the gift amount.

Income Tax Rules on Gifts Received on Marriage from Unrelated Individuals

If the gifts received by a newly married couple are from unrelated individuals, such as friends, and its value is above Rs. 50,000, then the tax will be charged to the recipient.

For example, if the couple’s friends give them gifts that are worth Rs. 40,000, then the recipient will not be charged any tax. However, if the couple receives another gift worth Rs. 20,000, then the tax will be levied on the entire value of the gift received, which is Rs. 60,000. The entire amount will be charged based on the income tax slab associated with the head of ‘income from other sources’.

But these rules don’t apply in case the presents are received as wedding gifts, irrespective of the sender. A couple can get cash, jewellery, stocks, immovable property, such as land or house, and it will not get taxed as the gifts are exempt under Section 56. However, in case a newly married couple gets immovable property as a gift from unrelated individuals, the stamp duty will have tax up to Rs. 50,000. It is recommended that newly married couples keep a record of the wedding gifts received.

Income Generated from Wedding Gifts

The gifts received by a newly married couple on their marriage might be tax-exempt, but the income generated by such gifts will be taxed.

For example, if a couple gets a property as a wedding gift, and they put the property on rent, then the income generated by rent will be taxable. Furthermore, if the couple sells the property, then the capital gain received will also be taxed.

What are Things to Keep in Mind While Accepting Marriage Gifts?

While the gifts received during the marriage are tax free, the married couple needs to know a few things before they record these gifts. In case a newly married couple gets assets or amounts, then they will have to mention the details of the people they have received the gifts from. Tax officials might levy a penalty in case they don’t find a good explanation for the presents.