“A tax loophole is something that benefits the other guy. If it benefits you, it is tax reform.” – Russell B. Long
The Income Tax Act 1961 of India contains a total of 23 chapters and 298 sections. Today, we talk about section 56 of this act, which discusses gift provisions and their tax implications. This section provides us with several favors. By virtue of this section, Money and gifts received by an individual taxpayer on the occasion of his/her marriage are exempt from income tax doesn’t matter whether clothes are gifted or a whole building. A pretty big advantage, isn’t it? But as we know, every coin has two sides, let’s talk about the dowry system in India.
The dowry system has had its roots in India for hundreds of years where cash and gifts are given by the bride’s family to the groom and his family for getting married, becoming the only ethical way to get married now. It is a social evil due to which a beautiful institution like marriage has merely become a business deal. In spite of putting a complete ban on dowry under The Dowry Prohibition Act of 1961, 95% of marriages include dowry. 20 deaths happen every day in India because of dowry, especially in states like UP and Bihar.
So, don’t you think that this favored gift provision can be one of the reasons which indirectly promotes dowry?
Section 56 provides us with another favor where gifts received by a taxpayer from his/her relatives are completely exempt irrespective of any occasion. Another huge advantage, right? But you know, a few months back there was a case in Allahabad High Court where a woman commits suicide after various cases against her, being subjected to harassment at her matrimonial home as she was constantly taunted that marriage was performed for very cheap, further it was made clear to the deceased that unless the amount asked for is fulfilled, it would be difficult for her to live in matrimonial home peacefully. Extremely cruel, right? Sadly, this is not only one case; this is the story of every second household in India.
All these incidents force us to give a second thought, whether these gift provisions are an advantage or a curse to the nation and its citizens. Don’t you think that these favored gift provisions are creating a lot of problems for many people in India? I believe there should be some sort of threshold limit on gift provisions stated above and heavy tax implications if these limits are crossed. Maybe after a small change, this noxious practice of dowry and harassment can be reduced to some extent.