Gifts from relatives are fully exempt — any amount, any type. Gifts from non-relatives are taxable only if the total received in a year exceeds ₹50,000, in which case the entire amount (not just the excess) is taxed as "Income from Other Sources" at your slab rate under Section 56(2)(x). Wedding gifts, inheritance and gifts under a will are fully exempt from anyone.
Gift Tax Rules — Decision Table
Whether a gift is taxable turns on who gave it and, for non-relatives, whether the yearly total crosses ₹50,000. Here is every common scenario.
| Gift Type | From Relative | From Non-Relative | Taxed As |
|---|---|---|---|
| Cash / money | Exempt | Taxable > ₹50K | Other Sources · slab rate |
| Immovable property | Exempt | Stamp value > ₹50K | Other Sources · slab rate |
| Shares / securities | Exempt | FMV > ₹50K | Other Sources · slab rate |
| Jewellery / valuables | Exempt | FMV > ₹50K | Other Sources · slab rate |
| Wedding gift (any giver) | Exempt | Exempt | Not taxable |
| Inheritance / under a will | Exempt | Exempt | Not taxable |
| Gift from employer | — | > ₹5,000/yr | Perquisite · salary |
The ₹50,000 test is on the aggregate of all non-relative gifts in a financial year. Cross it and the full amount is taxable, not merely the part above ₹50,000. Verify on incometax.gov.in before filing.
Who Counts as a "Relative"?
A gift from a "relative" as defined under Section 56(2)(x) is exempt without limit. Everyone else is a non-relative, and the ₹50,000 yearly test applies. Friends, cousins and colleagues are not relatives.
Relatives — fully exempt, no limit
- Spouse
- Brother / sister (and their spouses)
- Brother / sister of your spouse
- Brother / sister of either parent
- Any lineal ascendant or descendant (parents, grandparents, children)
- Any lineal ascendant / descendant of your spouse (and their spouses)
Non-relatives — taxable over ₹50,000/yr
- Friends and colleagues
- Cousins
- Fiancé / partner (before marriage)
- Aunt / uncle by relation not covered above
- Any person, company or trust not a defined relative
- Whole amount taxable once the yearly total crosses ₹50,000
The ₹50,000 is not a per-gift exemption. If your total non-relative gifts for the year are ₹49,000, nothing is taxable; at ₹51,000 the entire ₹51,000 becomes taxable income — there is no basic-exemption slice within the gift.
Not sure if your giver counts as a relative? Get it checked before you file.
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Gifts of Property, Shares & Jewellery
For non-relatives, a gift of immovable property is taxed on its stamp duty value if that value exceeds ₹50,000. A gift of movable property (shares, jewellery, paintings, bullion) is taxed on its fair market value (FMV) if the FMV exceeds ₹50,000. From a relative, all of these are exempt.
- Inadequate consideration (buying below value): if you pay less than stamp/FM value and the shortfall exceeds the limit, the shortfall is taxed as your income.
- When you later sell a gifted asset, the cost of acquisition is generally the previous owner's cost, and their holding period is included for computing capital gains.
- A registered gift deed plus records of the relationship establish that a property gift is genuine if the return is scrutinised.
How the ₹50,000 Rule Plays Out
Cash gift from a friend
Same gift from a brother
The ₹80,000 from a friend is fully taxable because it crosses ₹50,000; the identical amount from a brother is entirely exempt because a sibling is a relative.
Because a taxable gift is added to your income and taxed at slab rates, the actual tax depends on your regime and bracket. Under the new regime (default for AY 2026-27), the Section 87A rebate keeps tax nil up to ₹12,00,000 taxable income — a small taxable gift may still cost nothing if you stay under that line.
Received a large gift and want the tax computed correctly?
Get Return-Filing Help →Foreign Gifts, NRIs & Money From Abroad
The relative rule is not restricted to residents — a gift from an NRI relative (parent, sibling, spouse) is exempt just like a domestic one. A gift from a non-relative abroad above ₹50,000 is taxable in India under Section 56(2)(x) as Income from Other Sources.
- Money you send to someone abroad is not your income; the recipient is governed by their own country's tax laws.
- Outward gift remittances count within the LRS limit of USD 250,000 per year, and TCS may apply on large remittances (an advance-tax credit, not a tax on the gift itself).
- For inbound and outbound flows, keep bank records and, where relevant, meet NRI reporting requirements.
✓Exempt gift if
- Giver is a defined relative (resident or NRI)
- Received on your marriage
- Under a will or by inheritance
- Total non-relative gifts stay ≤ ₹50,000 for the year
!Taxable gift if
- From a friend / non-relative and yearly total > ₹50,000
- Property bought below stamp value (shortfall > limit)
- Employer gift above ₹5,000 in a year
- A "gift" that is really disguised income or a loan repayment
How to Report Gift Income in Your ITR
Taxable gifts are declared under "Income from Other Sources" (Schedule OS) in your income tax return. Exempt gifts need not be reported, but keep documentation in case of scrutiny.
- Aggregate all non-relative gifts for the year
- Check the ₹50,000 threshold
- Report taxable gifts under Schedule OS
- Use ITR-1 for salary + small gifts
- Use ITR-2 for property / capital-gains cases
- Keep a gift deed for significant gifts
- Retain bank transfer records (avoid cash)
- Keep relationship proof for relative gifts
- Note donor's cost for future capital gains
- Update property mutation records
Beyond gift tax, accepting a large gift in cash can attract penalties under the cash-transaction provisions (Section 269SS / 271D). Always route significant gifts through the bank so there is a clear, defensible audit trail.
- Act & e-filing: incometax.gov.in
- Gift provision: Section 56(2)(x), Income-tax Act 2025 (formerly Section 56(2)(x)/(vii), Act 1961)
- Cost of gifted asset on sale: Section 49, cost-of-acquisition rules
- Cash-gift limits: Sections 269SS & 271D
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position with the official source before you act on it.