Under the Section 56(2)(vi) provisions, certain gifts are tax able as ‘income from other sources’. The provision is applicable for individuals as well as Hindu Undivided Families (HUFs).

If a gift is received by a Trust or A.O.P., it is not taxable as ‘income from other sources’. Check the provisions of the Section for the taxation of gift amount in a given financial year. It is crucial to understand the definition of the term ‘relative’.

A gift received by an individual from one’s spouse, or from one’s sister or brother, or from the spouse’s sister or brother, parents, or from a lineal ascendant/descendant of oneself (or one’s spouse) would be fully tax exempt normally. Also, any gifts of any amount whatsoever received from the spouses of any of these would be completely tax exempt.

Whenever one opts to give or receive any gift from one’s relatives, one must apply the test carefully to determine whether the individual concerned falls within one of the categories of ‘relatives’. If not so, the person would be considered a non-relative and gifts from him or her would be exempt only up to the defined extent in a financial year. It may also be noted that since a HUF cannot have relatives, gifts received by it in excess of the prescribed limit in a financial year would be liable to full taxation.

Some people are under a (false) impression that the act of gifting cash by itself will translate into automatic tax deduction. They are confused over the fact whether gifting would lead to a lower TDS deduction on salary. The reply is NO.

There is no deduction on tax per se for gifting to family. The tax planning strategy should seek to optimize post-tax income, (after having done with tax liabilities). Someone in the highest tax bracket when opts to invest in a FD from money out of one’s post-tax salary, the FD interest gets fully taxable.

However, if one was to gift this amount to one’s parents who invest the same, the interest earned would become tax free. However, this would not directly affect the TDS deduction. Keep in mind the fact that beyond a point, tax-saving through gifting is not possible.

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In the previous posting, we explained to you how gifting can be extremely helpful in tax planning. We now understand the finer aspects of this. People are worried that, the income from the source that contributed to the gifts would get ultimately clubbed in their hands. Some are even concerned about attracting a gift tax.

One should know that gift tax has been terminated since October 1, 1998. There are no worries over attracting any gift tax. Clubbing provisions will come into play in case of gifts to minor children and spouse. Major (above 18) family members (barring spouse) can be gifted any amount of money freely without the donor falling into the clubbing net.

However, there has to be clarity regarding the procedure and whether it is required to make a gift deed on a valid stamp paper. Generally, it is better to make a gift deed and have it registered (with due stamp duty). Such a step is only necessary for making high-value gifts like real estate.

For other ‘tax-free’ gifting transactions, all a donor needs to do is make a gift and the acceptance of the same by the recipient. In simple terms, the donor can make the gift and the recipient should accept it in writing (even a thank you note will do). Once this is done, it be would considered a gift. Preferably, mention the relationship between the recipient and the donor. Both sides concerned should retain this formal document for ready reference if and when needed.

Some people are worried over the fact that making a gift to parents may make it mandatory of the latter to file a return. Well, the purpose of this exercise is that the income from the gift should not lead to any taxable income.

Hence, care should be taken to make sure that the income made from the gifted amount does not take your parents’ income above the taxable level. Ideally, consult an expert to avoid any confusion!

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The gesture of gifting has now taken a whole new context and meaning. Ethical gifting seems to be the buzzword, not restricted to the corporate sector alone. The trend now encompasses a range of actions like raising funds for a noble cause or pledging your wonderful wedding gift, supporting and helping an NGO, etc.

A DNA India news report by Sanghamitra Bhowmik points out that gifting has taken on an entirely new dimension with the internet. GiveIndia’s is one among the noteworthy innovations. The site has a webpage titled ‘iGive’, which can be used by visitors to raise funds for a specific cause or mission that they support or espouse.

Amita Chauhan of GiveIndia has been quoted as saying: “We once had a couple that donated the money they had received in gift during their wedding to an NGO of their choice.” 

Gifting eco-friendly products also has caught the fancy of the socially conscious class.
The proprietor of eco-friendly gift shop Eco Corner, Urvashi Mody has been in the business for over two and a half years. They already have several repeat customers for such gifts. Mody sources these eco-friendly products from across the country, as she claims. Her shop displays a variety of them including jute items, stationary, craft products designed by the tribal people and the underprivileged.

Nyassa in the western suburbs of Mumbai is another body that has on offer its line of nourishing natural body & beauty products that it produces and distributes. It was launched in 2007 by Ishwin Anand. The products are manufactured with essential oils and entirely natural materials.

Eco-friendly packaging is also becoming popular.

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If you and your spouse work in the same office you must have already been teased about upcoming Valentine’s Day. It is a special day that should be celebrated even if in a modest way. And considering the average workplace – it should be kept modest.

FOR MEN

With some good-natured office nudging about this day, you are sure to remember Valentine’s Day and get something special for your wife.

You can never go wrong with flowers, but flowers are just the basic prelude to the real gift. It doesn’t have to be big, or flashy or expensive, but it has to come from the heart.

There is a basis for saying that diamonds are a girl’s best friend. If you’re saving up for the real thing for your anniversary, buy a trinket made with her birthstone. Skip the usual earring or neck piece if your wife is confident about experimenting, and get her a delicate waist chain to wear with her sari or anklets. A sari, of course, would be the simplest piece to choose, considering that you cannot go wrong with the size, but instead of getting her the usual kind she normally wears, buy her a Gara or a Marathi sari or a South Indian style that she has never worn before. A woman prizes her sarees like men do their cigars. Remember that while it is great for you to receive something handy and useful around the house, a woman prefers something fun, decorative and something that sends her flying to Cloud Nine, like a pair of sexy shoes or a classy handbag. You may not understand the craving, but give in to it.

If you’re good with your hands, create a labour of love. A book shelf that she has long wanted just so and cannot find in the market, or a shoe rack.

But nothing spells love like being gifted a priceless, long-forgotten heirloom, for women value gifts which carry the weight of a sentiment. Like procuring a pearl necklace which belonged to her great grandmother or the last perfume her mother used before she passed away.

Bear in mind that a woman appreciates the time and energy spent on making the right choice and surprising her only adds to the excitement of opening a present.

FOR WOMEN

There’s simply no excuse for your husband to forget this special day now and he must have already kept your gift ready … at least he should have, and if he hasn’t then you can always pick up some handy tips from How to Kill Your Husband… on how to fix him. But though it is traditionally the man’s job to get the gifts and the woman’s, to receive them, it doesn’t mean that you can’t pick up some nice gifts for your husband or boyfriend too.

Men go for basic stuff that serves a purpose instead of just being easy on the eye, but today with the emergence of the metro sexual man you can get a lot of products that are not only handy but also easy on the eye. Like wallets whose colours diverge from the usual black, brown and navy blue and veer into shades of green, burnt orange, charcoals, and sedate greys – interesting, but still keeping a manly ego in place. Or watches that come with a variety of functions like reminders, calendars, alarms, radio, etc. Men like being gifted things that they can use, rather than just serving an ornamental purpose. They wouldn’t keep a certain clock because it ‘looks good’; they’d rather have something that boosts their image and looks powerful, like a sleek chrome clock that shouts out ‘class’ and ‘I-mean-business’. Or a really thick pen. An i-pod loaded with his favourite songs is a gift that he will love.

While you may love surprises, it is the opposite for men, so don’t make a big hoo-ha about it.

VALENTINE DONT’s

Avoid an office picnic hamper unless you are planning to share it with your colleagues and ready to clean up the mess. Nobody appreciates an employee taking more time than necessary at lunch and no one appreciates finding breadcrumbs in the grooves of the computer keyboard.

Public Display of Affection is a complete no-no – many find it embarrassing, at best, and distasteful, at worst. And no, V-Day is not a good-enough excuse.

Avoid gifting each other hygiene products that imply the other is not clean enough and could cause embarrassment in front of colleagues.

Last, but not the least, there is no need to break the bank for V-Day. Stick to your budget.

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