As the festive season approaches, the air is filled with excitement and anticipation. It's a time for celebrations, gatherings, and the exchange of gifts.?
However, amidst the joy and festivities, it's essential to be mindful of the tax implications associated with gifting and other financial transactions.
- Gifts from Non-Relatives: While it's heartwarming to receive gifts from friends and acquaintances, be aware that gifts valued over Rs. 50,000 must be reported and filed under "Income from Other Sources" under Section 56(2)(vii). However, gifts like cars, phones, TVs, furniture, or watches, regardless of their value, are exempt from taxes.
- Gifts from Relatives: Gifts received from close relatives like parents, spouse, siblings, and in-laws are exempt from taxes. Additionally, gifts received on the occasion of marriage are tax-free, even if their value exceeds Rs. 50,000.
- Charitable Giving: If you're considering donating to various governmental and non-governmental institutions, you can enjoy a tax deduction of 100% or 50% depending on the qualifying limit (an amount dependent on the type of fund)
- Section 80G and 80GGA: For an assessor making a donation to eligible funds or institutions, such donations are entitled to a tax deduction. Certain limitations from the gross total income apply.
- Home Loan Deductions: When purchasing a residential property, you can claim a deduction of Rs. 1.5 Lakh on principal repayment of home loans under Section 80C. First-time home buyers can also avail additional deductions under Section 80EE, subject to certain conditions.
- Physical Gold: While there's no limit on the amount of physical gold you can buy, it attracts capital gains tax when sold.
- Sovereign Gold Bonds (SGBs): Investing in SGBs offers the advantage of tax-free redemption and no capital gains tax. However, the interest earned is taxable.
- Claim Your LTA: Whether you are travelling for leisure or bleisure (business and leisure), be sure to claim your LTA. The current block period is 2022-2025.
As you navigate the festive season and plan your financial transactions, keep these tax considerations in mind. By understanding the rules and regulations, you can ensure a hassle-free experience and maximize your tax benefits. Happy holidays!
