Tax on Wedding Gifts in India

For instance, if your parents send Rs.10 lakh to your bank account as a wedding gift, you will not be charged any tax as they are your lineal ascendants.

The gifts received by a newly-wed couple could be taxable in case the monetary value of such gifts exceeds Rs.50,000 and they have been presented by any individual or entity who is not related to the couple. In this case, the tax will be charged to the recipient.

For instance, if all of your friends, combined, give you gifts worth Rs.45,000, you will not be charged any tax. However, if you get another gift whose monetary value is Rs.10,000, the total monetary value of the gifts you have received will be Rs.55,000, and the whole amount will be subject to tax based on the slab rate associated with 'income from other sources'.

However, these rules do not apply when gifts are received as wedding presents, regardless of the sender. Whether it is cash, stocks, jewellery, automobiles, electronics, artefacts, etc., or even immovable presents such as house or land, shall not attract tax and are exempt under Section 56 of the Income Tax Act, 1961.

But in case a newly-wed couple receives immovable property as a present from unrelated individuals, the stamp duty will attract tax up to Rs.50,000.

In case a newly-wed couple receives cash as a present, they should deposit the money into a bank account, and the date on which the deposit is made should be around the date of the wedding.

Gifts of high value, such as houses or cars, must come with a gift deed, and such a deed must be dated near to the wedding date. Newly-wed couples are advised to keep a record of all the wedding presents they have received, like a part of the regular documentation showing the assets they hold, particularly precious jewellery.

What are the Exemptions for Wedding Gifts in India?

In India, the gifts received by the couple during their wedding are viewed as income, and they need to be disclosed under the ‘Income from Other Sources’ category. However, you may get tax exemption in the below-listed scenarios.

1. The gift received by the couple from immediate family members, regardless of its value, is exempt from tax under Section 50 of the Income Tax Act. Any jewellery, property, or cash received by the couple from parents or siblings will not be taxed.

1. The gifts received by the couple from non-relatives will be exempt from tax up to Rs.50,000 in a year. This means, if the couple receives Rs.10,000 as wedding gift from friends, it will be exempt from tax. However, if the gift amount exceeds Rs.50,000, it will be taxed.

1. Any gift received by the couple by inheritance or by will, is exempt from tax.

1. Gifts received by the couple on the occasion of the wedding will not be taxed.

It is important for couples to understand the wedding gift tax laws and disclose their wedding gifts under ‘Income from Other Sources’ while filing ITR.

Income Accrued From Wedding Gifts

While the gifts received by a newly-wed couple on the occasion of their marriage are tax-exempt, the income generated through these gifts are subject to tax. For instance, in case a couple has received a property as a present for their wedding, and said property has been let out to rent, the income earned through such a property (the rent) will be taxable. In case the couple decides to sell the property sometime in the future, the capital gain generated through it shall be taxable.

New Bill To Charge Tax On Weddings

The Lok Sabha recently rolled out a bill through which the number of dishes served and guests invited to weddings will be capped. The reason for doing so is said to be so that the "show of wealth" can be checked, and people who spend in excess of Rs.5 lakh for a wedding will have to make a contribution towards the weddings of poor girls.

In case a family incurs costs over Rs.5 lakh on a ceremony, it will have to contribute 10% of the amount spent to the weddings of girls who come from poor families. The Bill was implemented by a Member of Parliament of the Congress, Ranjeet Ranjan.

The Marriages (CRPWE) (Compulsory Registration and Prevention of Wasteful Expenditure) Bill, 2016, as it is called, aims at prohibiting lavish spending on weddings, while trying to make the solemnisation simpler, according to Mrs Ranjeet.

She stated that the coming-together of two individuals is a solemn occasion of great importance. However, there have been an increasing number of families who, in recent times, have turned it into an occasion for displaying their wealth due to which the social pressure for excess spending has been a cause for concern for poor families who can't afford extravagant weddings. Mrs Ranjeet wishes to put a check on the amount of money spent on weddings, citing that it is for the greater good of society.

Under the Bill, families that wish to spend in excess of Rs.5 lakh on a wedding will have to state the amount it wishes to spend on the wedding to the relevant government. The 10% contributed by every family that wishes to spend more than Rs.5 lakh will go into a welfare fund.

The relevant government will have to establish the welfare fund so that assistance is provided to families that are poor and under the Poverty Line, and through this assistance, the marriage of girls from poor families shall be funded.

Mrs Ranjeet also said that once the proposed legislation is passed, all weddings will have to be registered within 60 days from the date of the wedding. The number of friends and relatives (guests) invited as well as the number of dishes served during a wedding is yet to be fixed by the government.