Report Diwali gifts in your ITR

FAILURE CAN LEAD TO PENALTIES OF 50-200% OF THE TAX AMOUNT

- SAIKAT NEOGI

YOU MAY BE receiving small amounts of money from friends and family as gifts this festive season.

If received from parents, siblings or spouse, the amount must be reported as exempt income in the income tax return (ITR) to avoid under-reporting.

If the total amount received from friends exceeds ₹50,000, it should be declared in your ITR. It will be treated as income from other sources, and taxed as per slab rate. In case of non-reporting, under Section 270A, penalty may be levied at 50% of the tax for under-reported income and at 200% of the tax where misreporting is established.

Besides that, interest at the rate of 1% per month or part of the month as per sections 234A, 234B and 234C may also apply.

Penalty for nondisclosure