Income Tax Rule: As the year ends, the year-long celebrations begin. This period lasts for six months. Weddings bring the excitement of household preparations, guest lists, gifts, and rituals. But there’s one thing that people often overlook: what are the tax rules on wedding cash gifts? Unawareness can turn a happy occasion into a tax penalty. Therefore, it’s important to know what the Income Tax Act says about wedding gifts, especially cash.
Are wedding gifts taxable?
According to the Income Tax Act, wedding gifts—whether cash, checks, jewellery, or property—are completely tax-free. While wedding gifts don’t constitute income, that doesn’t mean you can accept any amount in cash. There are separate rules for cash gifts.
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Rules for Accepting Cash Gifts at a Wedding
According to the Income Tax Act, it is against the law to accept more than ₹2 lakh in cash from one person in a single day. This means that no relative, friend, or gift-giver can give you more than ₹2 lakh in cash at one time.
What if you take more than ₹2 lakh in cash?
If you exceed this limit, you are fined the same amount as the amount of cash you took in violation of the rules. For example, if someone gives you ₹3 lakh in cash, you could face a penalty of ₹3 lakh. This action is taken under Section 269ST of the Income Tax Act.
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The Right Way to Accept More Than ₹2 Lakh
If someone wants to gift you more than ₹2 lakh, do not accept it in cash. Instead, you can accept the amount through various methods, including check, RTGS, NEFT, IMPS, and online modes. With this decision, you can safely withdraw large sums of money and avoid any penalties.