Tax on gifts

I think it is better to refuse the gifts received from the employer in these conditions.

rambabu wrote:I think it is better to refuse the gifts received from the employer in these conditions.

How can you reduce gifts. If tax is payable, let this be so. any way, this is not 100%.  If you get a gift of Rs. 100/- and have pay tax Rs. 30/- ( may be just Rs 20/-), you still retain Rs. 70/- with you. Why lose the whole to save a part?

 

Then such gifts are not called as GIFTS. A Gift is one which has no Strings attached to it.

 

rambabu wrote:

Then such gifts are not called as GIFTS. A Gift is one which has no Strings attached to it.

 

A gift is gift. Employer gives gift without any strings. Taxability is another matter.  If gifts were made just tax free, the employers would manage to pay most of the remuneration as 'gift'  instead of salary.  Gifts even from other persons are taxable. There is some relaxation only for blood relation. 

 

 

Gulshan Kumar Ajmani wrote:

rambabu wrote:I think it is better to refuse the gifts received from the employer in these conditions.

How can you reduce gifts. If tax is payable, let this be so. any way, this is not 100%.  If you get a gift of Rs. 100/- and have pay tax Rs. 30/- ( may be just Rs 20/-), you still retain Rs. 70/- with you. Why lose the whole to save a part?

 

True, we need to be practical about it and accept whatever comes to us...ultimately you are gaining unless it is something you cannot afford to pay tax on, then of course you have the option to refuse !

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

By that logic people should refuse salaries alosoas they also attract taxes !!!

By that logic people should refuse salaries also as they also attract taxes !!!

Believe it or not. I have refused my my 3 months salary, when it was offered to me during my voluntary retirement party.I can understand your point of view. Salaries also should be refused but to that extent I'm paying taxes.

 

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

 

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

 

 

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

 

 

 

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

Agreed sir. But that is salary and this is named as GIFT. When I receive my salary i can understand that my salary is subject to taxes. And I also understand that I'm bound to pay taxes. There is no confusion about the Income tax on my salary.

 

 

 

 

 

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

Agreed sir. But that is salary and this is named as GIFT. When I receive my salary i can understand that my salary is subject to taxes. And I also understand that I'm bound to pay taxes. There is no confusion about the Income tax on my salary.

 

Please also remove confusion on taxability of taxes. For govt, a gift is alo income. If all gifts were made tax free, people would simply give each other only gifts so that there would be no tax.  I remember that once, gift to wife was taxable but not other gifts.  So many began gifting  others' wives on reciprocal basis. a would give gift to B's wife and B would give gift to A's wife.  So all that became tax free. Taxation is a financial issue and so we should see this from that angle. I agree that donor should give gift unconditionally. But the govt. will recieve a part as tax.  

 

 

 

 

 

 

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

Agreed sir. But that is salary and this is named as GIFT. When I receive my salary i can understand that my salary is subject to taxes. And I also understand that I'm bound to pay taxes. There is no confusion about the Income tax on my salary.

 

Please also remove confusion on taxability of taxes. For govt, a gift is alo income. If all gifts were made tax free, people would simply give each other only gifts so that there would be no tax.  I remember that once, gift to wife was taxable but not other gifts.  So many began gifting  others' wives on reciprocal basis. a would give gift to B's wife and B would give gift to A's wife.  So all that became tax free. Taxation is a financial issue and so we should see this from that angle. I agree that donor should give gift unconditionally. But the govt. will recieve a part as tax.  

 

 

 

 

 

 

Just a thought ! why not deduct tax before handing over the gift ? It is easy if it is cash gift or else it will become complicated ...

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

Agreed sir. But that is salary and this is named as GIFT. When I receive my salary i can understand that my salary is subject to taxes. And I also understand that I'm bound to pay taxes. There is no confusion about the Income tax on my salary.

 

Please also remove confusion on taxability of taxes. For govt, a gift is alo income. If all gifts were made tax free, people would simply give each other only gifts so that there would be no tax.  I remember that once, gift to wife was taxable but not other gifts.  So many began gifting  others' wives on reciprocal basis. a would give gift to B's wife and B would give gift to A's wife.  So all that became tax free. Taxation is a financial issue and so we should see this from that angle. I agree that donor should give gift unconditionally. But the govt. will recieve a part as tax.  

Absolutely there is no confusion about Taxes. And I know Taxation is a financial issue.I worked in PSU for 25 years and took voluntary retirement on personal grounds. I am very much used to Taxes deducted at the source in my bank My department issues form 16.

Because i know a corporate gift is also taxable  this is the aspect that I did not like it. When I saved lakhs of rupees to my organization  through my innovative works my organization gave me gifts as a token of my exemplary contribution. It is only then I came to know this gift given to me is taxable. Since then I started refusing all the gifts given by my organization. Because i  felt since it is given as GIFT it should be tax free. My Officers also said what you said now. Then I asked if I refuse will it be taxed. They said no. Then I refused such gifts. Not one but many.

 

 

 

 

 

 

 

It is important,relevant and needs to be stressed in this context that there separate provisions for treatment of gifts from employers and section 17(2) and rule 3 of I.T. Act should referred to for guidance. Prudence demands that offer of onerous gifts should be avoided. 

@Rambabu As I have stated in my post that there exists separate provisions in this regard which clearly state that gift exceeding Rs 5000 in value will be treated as perks and taxible in the hands of the employee while it is a deductible business expenditure and the rate of tax will depend on one's overall taxable income.Obviously the prospect of paying tax should not make us shy of accepting gifts.We have to judge if its acceptance works to our financial and material benefit or not.

So kind of you Chinmoy. You took the trouble for providing the nuances of Taxation. In this connection I must thank you and Gulshanji ji.

 

usha manohar wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

Gulshan Kumar Ajmani wrote:

rambabu wrote:

I have done it. When I was selected for the prestigious Award known as Jawahar Award  a famous award popular in PSU steel plants for saving a substantial amount to the company, I refused to accept.. Because of the heavy taxes imposed on such awards.

 

Would the tax exceed the reward?   The tax is definitely not 100% or more. It is maximum 30% plus education cess.  You lose more by refusing award rather by paying tax. Is it better to pat 30% tax or forego entire 100%. I don't understand the logic. Hope you will elucidate. There is only one condition when you may refuse. It may be that you get award in shape of some non financial asset like Motor car but you don't have cash to pay rax. I came across some person who won lottery of a motor bike. This was taxable.  He paid tax to the lotter manager as a way of TDS and got the bike. I got him refund of income tax by filing his return showing total income including that of motor cycle lottery. . 

 

I view things in a different way. For a A Gift given to my daughter, I will not demand anything from her. The same thing applies to the corporate gifts as far as I'm concerned. A gift in true sense is a token of love or loyalty or anything as the case may be without any strings attached.

 

The govt. does not give gift but only imposes tax on a gift that you receive from some source.  By the way, gift received from father is not taxable as this is from blood relation. But if you receive gift freom corporate or elsewhere, this is taxable. Here the donor is not getting back anything. Only this is subject to tax.  If this is thinking, you need not receive anything- even salary- which is subject to tax. 

 

Agreed sir. But that is salary and this is named as GIFT. When I receive my salary i can understand that my salary is subject to taxes. And I also understand that I'm bound to pay taxes. There is no confusion about the Income tax on my salary.

 

Please also remove confusion on taxability of taxes. For govt, a gift is alo income. If all gifts were made tax free, people would simply give each other only gifts so that there would be no tax.  I remember that once, gift to wife was taxable but not other gifts.  So many began gifting  others' wives on reciprocal basis. a would give gift to B's wife and B would give gift to A's wife.  So all that became tax free. Taxation is a financial issue and so we should see this from that angle. I agree that donor should give gift unconditionally. But the govt. will recieve a part as tax.  

 

 Just a thought ! why not deduct tax before handing over the gift ? It is easy if it is cash gift or else it will become complicated ...

 

I agree. Infact, tax is deducted before paying. But some times there is a gift or lottery in kind. As I mentioned in a reply, once an Air Force employee won a Two wheeler in lottery. He paid the tax amount as TDS to the lottery agency.  But in view of his total income including lottery being less than taxable, he got refund from Income Tax department. I helped him getting the refund as a consultant.