Distinguish between Casual Income and Gift.
Difference between Casual Income and Gift.
Casual income is defined as an income which is not an expected regular income and occurs suddenly as a windfall gain. It can be from business also, for example, a golden handshake to a terminated director or simply winning a lottery or a TV game show. These are unexpected and non-recurring in nature. All casual incomes are taxable.
Gifts on the other hand are personal in nature, not having a business element at all. Main difference is that casual incomes are taxable whereas gifts are outside the purview of taxation unless it is found that the gift adds to the salary or has been generated from a business or a profession. Casual incomes are taxed under Section 56 of the Income Tax Act whereas gifts are taxed under the Gift Tax Act. Gifts are exempted up to Rs. 50,000. Certain gifts as received from relatives, on occasion of marriage, etc. are completely tax free.