1. Gifts from relatives

According to the new budget any gift from relatives of any amount during the financial year is completely exempt from tax. Therefore, it's crucial to know the meaning of the expression 'relative' for this purpose. The Explanation to Section 56(2)(vi) provides that the expression "relative" means: ­ Spouse of the individual, brother or sister of the individual, brother and sister of the spouse of the individual, parents, or from any lineal ascendant or descendant of oneself or one's spouse would normally be fully tax-exempt. Similarly, any gifts of any amount whatsoever received from the spouses of any of these persons would also be completely exempted from income tax.

2. Cash amount Up to Rs 50,000

Beware of cash or gifts in kind from non-relatives as it is taxable if the value of present goes above 50,000 in a year. Suppose if the value of gift is Rs 55,000, then this entire value of Rs 55,000 is added to your gross total income and you have to pay tax on it, as per your tax slab. In case you have been gifted immovable property, without any consideration, and the stamp duty value exceeds Rs 50,000, it is this stamp duty value which will be part of your gross income. However, if you have paid some consideration, but it is still less than the stamp duty value, the difference is added to your income. For gifts other than immovable property like jewelry the same principle applies except that the fair market value of such a gift is considered.

Thus be very careful while even gifting your wife who is a housewife with a cheque of 1 lakh and she earns interest on it, then this interest would be clubbed with your income.

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