No way to declare exempt gift in ITR

By Neeraj Agarwala

Concerns have been voiced about notices issued by the Income Tax (I-T) Department regarding non-taxable gifts received from family members. While such gifts are legally exempt from tax under certain conditions, the lack of a designated reporting section in income tax return (ITR) forms has created confusion and led to unnecessary scrutiny.

Also ReadReview portfolio at every major life event Understanding non-taxable gifts

Under the Income Tax Act, gifts received from specified relatives—such as parents, siblings, or spouses—are fully exempt from tax, irrespective of their value. Similarly, gifts received on special occasions like marriage or through inheritance are also exempt. Despite these exemptions, confusion arises because the ITR lacks a dedicated section to report such exempt income. When high-value transactions, such as money transfers or property gifts, are flagged by banks or financial institutions, the I-T Department may find it challenging to reconcile them with the information provided in the ITR. This discrepancy often prompts the issuance of notices, seeking verification of the nature and source of these transactions.

Responding to I-T notices

Receiving a notice can be intimidating, but a timely and accurate response can resolve the issue efficiently. Here’s how you can proceed:

Review the notice carefully: Identify the specific section under which the notice has been issued and understand the information being sought.

Gather supporting documents: Compile all relevant documentation, such as gift deeds or declarations signed by the donor mentioning the relation of the donor and donee. Bank statements reflecting the transfer. Proof of relationship with the donor (e.g., birth certificates, marriage certificates).

Draft a response: Explain the nature of the gift and its exemption under the I-T Act. Attach the supporting documents to substantiate your claim.

Submit your response: You can respond to the notice through the income tax portal under the ‘Pending Actions’ tab. Navigate to ‘Response to Outstanding Demands,’ select ‘Disagree with Demand,’ and provide an explanation stating that the transaction is exempt from tax. It is essential to attach a copy of the gift deed executed during the transfer, clearly indicating it as a genuine gift without consideration.

Also ReadHarvest tax-free capital gains

While non-taxable gifts from family are legitimate and exempt from income tax, the lack of a dedicated reporting mechanism in ITR forms has led to avoidable complexities.

 » Read More

Related Articles

Markets bleed in fear of Trump fire

It was a cruel joke on the stock markets on April Fool’s day, which was also the beginning of a new financial year. Stock indices fell over 1.5% on Tuesday — their biggest single-day drop in more than a month. Fears of US President Donald Trump’s reciprocal tariffs kicking in April 2 kept investors on

Workers’ union threatens strike again at Samsung

Less than a month after ending their strike, the Samsung India Workers’ Union (SIWU) has threatened to issue a fresh strike notice, citing unfair labour practices and alleged vindictive actions by Samsung India management. The decision was taken at a general body meeting in Kancheepuram on Sunday, which was reportedly attended by over 1,000 workers.

Tech M sees strong market in APAC, robust demand for AI-driven solutions

Tech Mahindra is witnessing a sizable market in the Asia-Pacific region (APAC) including Japan, with a strong demand flow and a robust pipeline for new projects  across various industries, including telecom, BFSI, retail, and manufacturing, Harshvendra Soin, President – Asia Pacific and Japan Business, Tech Mahindra, told FE.  “This (fiscal) year has been a tremendous

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Markets bleed in fear of Trump fire

It was a cruel joke on the stock markets on April Fool’s day, which was also the beginning of a new financial year. Stock indices fell over 1.5% on Tuesday — their biggest single-day drop in more than a month. Fears of US President Donald Trump’s reciprocal tariffs kicking in April 2 kept investors on

Workers’ union threatens strike again at Samsung

Less than a month after ending their strike, the Samsung India Workers’ Union (SIWU) has threatened to issue a fresh strike notice, citing unfair labour practices and alleged vindictive actions by Samsung India management. The decision was taken at a general body meeting in Kancheepuram on Sunday, which was reportedly attended by over 1,000 workers.

Tech M sees strong market in APAC, robust demand for AI-driven solutions

Tech Mahindra is witnessing a sizable market in the Asia-Pacific region (APAC) including Japan, with a strong demand flow and a robust pipeline for new projects  across various industries, including telecom, BFSI, retail, and manufacturing, Harshvendra Soin, President – Asia Pacific and Japan Business, Tech Mahindra, told FE.  “This (fiscal) year has been a tremendous

Foxconn India unit invests $32 million in equipment for Apple manufacturing

Taiwanese manufacturing giant Foxconn has procured machinery worth $32 million (about ₹276 crore) for manufacturing Apple products in India. The purchase comes months after China allegedly delayed shipments of specialised equipment and restricted new work rotations for Chinese employees at its Indian factories. In a regulatory filing, Foxconn said, its subsidiary, Foxconn Hon Hai Technology

Flight to safety takes gold to all-time high

Ahead of US President Donald Trump’s imposition of reciprocal tariff from April 2, gold prices on Tuesday hit an all-time high as investors sought safety amid the stock-market meltdown.   In the international market, spot gold prices hit $3,148/ounce. From $2,624 at the beginning of the year, prices have so far appreciated 20% in 2025. In