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What we offer?

  • Advise on gift tax laws in India and USA
  • Tax planning so that you don't pay any gift taxes in India and USA
  • Gift Tax Form filings in USA
  • Income Tax Returns for gifts received in India

Gift Tax in INDIA

As per the Income Tax Act, 1961 if the value of gifts received is more than Rs 50,000 a year, then such amount is taxed as income in the hands of the receiver. These gifts may be in any form – cash, jewellery, movable and immovable property, shares etc.

However, this rule is not applicable if your relatives* present the gifts.

*A Relative can be any of the following-

  • Spouse of the Individual.
  • Brother or sister of the individual, spouse or of either parent.
  • Lineal ascendants or descendants of individual or of spouse
  • Spouse of person referred in 2 or 3 above.

Gift Tax in US

Annual Exclusions

The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $14,000, the annual exclusion applies to each gift. The annual exclusion for 2016 is $14,000.

Liability to bear Gift Tax

The donor is responsible for paying the gift tax. Under special arrangements the done may agree to pay the tax instead.

Exclusions from Gift Tax
The following Gifts are exempt from Tax:
  • Gifts that are not more than the annual exclusion for the calendar year
  • Tuition or medical expenses you pay for someone (the educational and medical exclusions).
  • Gifts to your spouse.
  • Gifts to a political organization for its use.
Filing of Gift Tax Return in US

The Gift Tax return in Form 709 is due on April 15th following the year in which the gift is made.

Lifetime Gift Tax Exemption/Estate Tax Exemption

The lifetime Exemption available is $5.45 million.

For Estate Taxes the maximum property that can be acquired from inheritance is $5.45million. If it exceeds the limit then it is taxes @40% under FORM 706.

For Gift Tax: The life time limit of $5.45 million is available after you’ve exceeded the annual gift tax exclusion. However using this exemption the limit for estate taxes also reduces from $5.45 million. If the gift exceeds the annual exclusion limit then Form 709 is to be filed.

Scenario 1

Mrs Deepika is a US Resident and she gifted a Land worth $1.5 million to her Father residing in India. Mrs Deepika wants to know implication of this transaction and also disclosure of the same in US Return.

In this case, Mrs Deepika has to disclose the same in Form 709 in US since the gift is exceeding the annual limit for Deepika in US. But the amount exceeding $14,000 can be adjusted against the life time gift tax exemption of $5.45 and therefore no taxes needs to be paid.

Implication in India

Deepika falls under the category of ‘Relatives’ for her Resident Father. Hence, father need not pay any tax thereon for the gift received.