Gift Tax in India —
Who Pays, Who is Exempt
When a gift is tax-free, when it is taxed as "Income from Other Sources", the Rs 50,000 non-relative rule, the list of exempt relatives and exactly how to report it in your ITR.
India has no separate Gift Tax Act (abolished in 1998). Gifts are taxed in the recipient's hands under Section 56(2)(x) as "Income from Other Sources" at the slab rate. Gifts from specified relatives are fully exempt, whatever the amount. From non-relatives, if the aggregate value in a financial year exceeds Rs 50,000, the entire amount (not just the excess) is taxable. Gifts on marriage, by will or inheritance, and from a registered charitable trust or local authority are also exempt.
From Tax Year 2026-27, the new Income-tax Act, 2025 renumbers Section 56(2)(x) of the 1961 Act as Section 92. The Rs 50,000 threshold, the relatives list, the marriage/will exemptions and the 10% immovable-property tolerance are all unchanged — "56(2)(x)" stays the familiar name.
Specified Relatives — Gifts Fully Exempt
A gift from any of the relatives below is exempt with no upper limit, in cash or in kind. Note that gifts between spouse, or from parent to a minor child, may still attract income clubbing on any income the gifted asset later earns.
| Relative of the recipient | Covered persons | Gift |
|---|---|---|
| Spouse | Husband / wife | Exempt (clubbing may apply) |
| Parents & their siblings | Father, mother, and their brother/sister | Exempt |
| Own siblings | Brother, sister (incl. step) | Exempt |
| Lineal ascendants / descendants | Children, grandparents, grandchildren | Exempt |
| Spouse's relatives | Spouse's siblings and their spouses, spouse's parents | Exempt |
| Siblings' spouse | Brother-in-law / sister-in-law | Exempt |
Cousins, friends, colleagues and fiancé(e) are NOT "relatives" — gifts from them fall under the Rs 50,000 non-relative rule.
Gift Tax Treatment by Type
For a non-relative, the Rs 50,000 test is applied to the aggregate of all such gifts in the year. Once crossed, the whole value is added to your income and taxed at your slab rate.
| Type of gift | From a relative | From a non-relative | Valued at |
|---|---|---|---|
| Cash / cheque / bank transfer | Exempt | Taxable if total > Rs 50k | Actual amount |
| Immovable property (land / flat) | Exempt | Taxable if SDV > Rs 50k* | Stamp-duty value |
| Listed shares / securities | Exempt | Taxable if FMV > Rs 50k | FMV on gift date |
| Jewellery / bullion / art | Exempt | Taxable if FMV > Rs 50k | Fair market value |
| Gift on your marriage | Exempt | Exempt (any amount) | — |
| By will / inheritance | Exempt | Exempt | — |
* Immovable property is taxed only if the stamp-duty value exceeds the consideration paid by BOTH more than Rs 50,000 AND more than 10% (the "110%" tolerance). A gift with no consideration uses the full stamp-duty value.
The Rs 50,000 is a threshold, not an exemption slab. If a friend gifts you Rs 60,000, the entire Rs 60,000 is taxable — not just Rs 10,000. Split, unrelated small gifts also aggregate: five Rs 15,000 gifts from different non-relatives total Rs 75,000 and become fully taxable.
Received property or shares as a gift and unsure of the tax? Get it reviewed.
Talk to a Tax Expert →How Much Tax on a Gift From a Friend?
A gift taxable under Section 56(2)(x) is added to your total income and taxed at your marginal slab. Here is a friend's Rs 3,00,000 cash gift for a recipient already in the 30% slab, versus the same gift from a brother.
Rs 3,00,000 gift from a friend
Rs 3,00,000 gift from a brother
If you later sell a gifted asset, capital gains are computed using the previous owner's (donor's) cost and holding period where the gift was exempt; where the gift was itself taxed under 56(2)(x), the value already taxed becomes your cost of acquisition.
Gift is tax-free when
- It comes from a specified relative — any amount
- You received it on the occasion of your marriage
- It came through a will or on inheritance
- Total non-relative gifts in the year stay at or below Rs 50,000
Gift is taxable when
- A non-relative's gifts cross Rs 50,000 in the year
- Property is bought far below stamp-duty value
- A gift deed / trail is missing and the source is questioned
- You forget it and it shows up in your AIS
How to Report a Gift in Your ITR
- Gift deed or written confirmation from the donor
- Bank statement showing the credit
- Proof of the donor's relationship (for relative gifts)
- Stamp-duty valuation for immovable property
- FMV / broker note for shares gifted
- Wedding invitation, if claiming marriage exemption
- Taxable gifts entered in Schedule OS
- Exempt gifts disclosed in Schedule EI
- Gift entries reconciled with your AIS / Form 26AS
High-value transfers are increasingly reflected in your Annual Information Statement (AIS). A gift you did not disclose can trigger a mismatch notice. Keep a gift deed for anything substantial and disclose exempt gifts in Schedule EI for a clean trail — it is the simplest defence in a scrutiny.
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Get ITR Filing Help →Gift Tax in India — Frequently Asked Questions
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Received a Gift? Report It the Right Way
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