The Indian Central Board of Direct Taxes (CBDT) has confirmed the details of a budget amendment which now taxes recipients of all gifts in kind worth over INR50,000 (USD1,000), effective in respect of all gifts donated on or after October 1, 2009.
Any such gift, including real estate, cars and diamond jewellery, will attract income tax at the recipient's marginal tax rate - those in the highest 30% tax band are therefore charged at 30%. Previously the tax only applied to cash gifts.
There are certain exemptions; these include gifts received from a relative, on the occasion of marriage, under a will or by way of inheritance, in contemplation of death of the donor and from a trust. Relatives have been defined as spouse, brother or sister, brother or sister of spouse, brother or sister of either parents, any lineal ascendant or descendant and spouse of any of the relatives.
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