Many of you will feel wonder by knowing that even while buying a gift for our near and dear ones, we pay a large amount of tax for it. In this blog our Rewrite My Essay experts will guide you about the importance of gift tax and why it is considered to be a paper tax.
Before going to any decision the first thing we should know, what actually gift tax is?
It is such a type of tax that is applied to an individual gift that you bought for your loved ones. Generally the gift donor reports the gift on their tax return and pays the gift tax. On the contrary the recipient doesn’t need to report the gift and pay the tax. But under some special circumstances the recipients have to pay the gift tax.
In India, one of the convenient modes of transferring property and money is done by gifting. Gifts can be of any type: movable or immovable. According to ITA, an amount of money more than 50,000 is considered to be under tax payable.
What kind of tax is it?
Gift tax mainly imposes tax on large gifts to prevent the larger amount of transfers of wealth i.e. money, house etc without any tax implications. It is considered to be a transfer tax. Don’t take it as an income tax.
Rate of Gift Tax?
If the value of your gift exceeds the margin then it will come under taxation. Normally the tax rate remains between 18 percent and 40 percent. It is totally based on the value. While paying the tax you have to submit IRS Form 709 attached with your return.
How does it work?
Suppose you are paying a gift which costs 75,000 i.e. it is exceeding the limit of 50,000. Then you have to pay the tax for that extra 25,000 (75000-50000).
On the contrary, there are some kinds of gifts those are completely exempted from paying taxes like
· While you are paying for medical or educational purposes as gifts
· Amount given to political organizations for the development of that particular organization.
· While you are paying to some charity like an old age home, orphan house etc.
· If you are paying an amount to your spouse. But in that case, the spouse must be a citizen of the U.S. if not then after exceeding the limit, it will come under the taxable amount.
Now the question is what is paper tax?
When the income tax return is filled in a form and filled by the taxing authority then it is considered to be as paper taxes. This kind of tax is mainly filed annually in most of the countries including India. It is applicable for an individual person or businesses too. Here the taxpayer pays the amount based on his or her wages, interest gained in that particular year, from dividends or money earned from profits or other various sources.
In case of gift tax, here also the taxpayers pay the amount annually based on the amount he or she is giving someone as a gift. As this kind of tax is given in paper form that’s why gift tax is also considered as a paper tax.
After reading the whole blog I hope you will get an outline regarding the similarity of gift tax and paper tax and why gift tax is called paper tax. Before filing your gift tax if you face any kind of trouble you can ask our Dissertation Writer experts. For more updates log on to our official website and check the necessary details to contact them.