Gifts received from non-relatives exceeding ₹50,000 in aggregate in a financial year are fully taxable as "Income from Other Sources" under Section 56(2)(x) — and the entire amount, not just the excess, is added to your income and taxed at your slab rate. Gifts from relatives, gifts on the occasion of your marriage (from anyone), and gifts by inheritance or under a will are fully exempt with no upper limit.
Once gifts from non-relatives cross ₹50,000 in a year, the WHOLE amount becomes taxable — not merely the part above ₹50,000. Receive ₹70,000 in cash gifts from friends and all ₹70,000 is taxed; receive ₹49,000 and nothing is taxed. Gifts from multiple non-relatives are aggregated for the year.
Gift Tax Rules — Decision Table
Every common gift scenario in India under Section 56(2)(x), with the tax treatment and the applicable limit.
| Gift Type / Situation | Tax Treatment | Limit |
|---|---|---|
| Cash / cheque from a relative | Exempt | No limit |
| Cash / cheque from a non-relative (no occasion) | Taxable if aggregate > ₹50K | ₹50,000/year aggregate |
| Wedding gift — from anyone, any amount | Exempt | No limit |
| Gift by inheritance / under a will | Exempt | No limit |
| Gift from HUF to its members | Exempt | No limit |
| Gift from employer | Perquisite (salary) | Exempt up to ₹5,000/year |
| Birthday / anniversary / festival gift from non-relative | Taxable if aggregate > ₹50K | ₹50,000/year aggregate |
| Immovable property (free) from non-relative | Stamp duty value taxable if > ₹50K | ₹50,000 |
| Shares / jewellery (FMV) from non-relative | FMV taxable if aggregate > ₹50K | ₹50,000/year aggregate |
| Gift from a fund / institution u/s 10(23C) / registered trust | Exempt | No limit |
Section 56(2)(x) of the Income-tax Act. The ₹50,000 threshold and the relative/marriage/inheritance carve-outs continue unchanged under the Income-tax Act, 2025 (applicable from AY 2026-27). Verify on the official portal before filing.
Who Counts as a "Relative"?
Gifts from a "relative" as defined in the Act are exempt with no upper limit. The definition is specific and limited — cousins, in-laws beyond the listed set, friends and colleagues are not relatives, so their gifts fall under the ₹50,000 rule.
| Relationship | Exempt? |
|---|---|
| Spouse | Yes — exempt |
| Brother or sister | Yes — exempt |
| Brother or sister of spouse | Yes — exempt |
| Brother or sister of either parent | Yes — exempt |
| Parents, grandparents & up the line (lineal ascendant) | Yes — exempt |
| Children, grandchildren & down the line (lineal descendant) | Yes — exempt |
| Spouse of all the above relatives | Yes — exempt |
| Cousin, nephew, niece | Not a relative — taxable |
| Friend, colleague, acquaintance | Not a relative — taxable |
For a Hindu Undivided Family (HUF), gifts from any member of the HUF are also treated as gifts from a relative and are exempt.
If you are unsure whether a relationship qualifies as a "relative", it is safer to treat the gift as taxable and disclose it in your ITR. Keeping a simple gift deed or bank trail for large gifts helps you defend the exemption if the department queries it.
Unsure whether a gift you received is taxable?
Ask a Tax Expert →Wedding Gifts, Inheritance & Will
Wedding gifts are completely exempt — no upper limit, no restriction on who the donor is, and no requirement that the donor be a relative. The exemption applies to gifts received "on the occasion of the marriage of the individual" and covers cash, jewellery, property or any other asset.
- The exemption is for the individual getting married — not for their relatives receiving gifts from guests.
- The occasion must specifically be marriage. Birthday, anniversary, festival, housewarming and retirement gifts from non-relatives are not covered and fall under the ₹50,000 rule.
- Gifts received by inheritance or under a will are fully exempt regardless of value — India has no estate duty or inheritance tax (estate duty was abolished in 1985).
Inheriting or being gifted an asset is tax-free, but any income it later generates (rent, dividends, interest) is taxable in your hands. On sale, capital gains apply using the previous owner's cost of acquisition (with the base date of 1 April 2001 where the asset is older).
Received property or shares as a gift and planning to sell?
Get Capital Gains Advice →Gifts of Property & Shares — How They're Valued
Gifts in kind are valued differently from cash. The ₹50,000 test is applied to the stamp duty value (immovable property) or fair market value (movable property such as shares, jewellery, bullion or paintings).
| Gift in Kind | What is Compared to ₹50,000 | What is Taxable |
|---|---|---|
| Immovable property received free | Stamp duty value (SDV) | Entire SDV if it exceeds ₹50,000 |
| Immovable property for inadequate consideration | SDV minus price paid | The shortfall, if it exceeds ₹50,000 |
| Shares / securities received free | Aggregate FMV in the year | Entire FMV if it exceeds ₹50,000 |
| Jewellery / bullion / art received free | Aggregate FMV in the year | Entire FMV if it exceeds ₹50,000 |
| Movable property for inadequate consideration | FMV minus price paid | The shortfall, if it exceeds ₹50,000 |
SEBI-listed shares use the closing price on the date of receipt; unlisted shares use a prescribed net-asset-value / registered-valuer method.
When you later sell a gifted asset, your cost of acquisition is the value that was taxed as income in your hands. If the gift was exempt (from a relative or under a will), you inherit the previous owner's original cost — important for computing capital gains correctly.
How to Report Gifts in Your ITR
Taxable gifts from non-relatives are reported under Schedule OS (Income from Other Sources) of your ITR — usually ITR-2 for individuals with such income. Even where no TDS was deducted, the income must be self-disclosed.
- Aggregate all non-relative gifts for the year
- Apply the ₹50,000 test correctly
- Value gifts in kind (SDV / FMV)
- Report taxable gifts in Schedule OS
- Keep gift deeds / bank trail for large gifts
- Retain the will for inherited assets
- Note the cost base for future capital gains
- File the correct ITR form
Need help reporting a gift or choosing the right ITR form?
File with TaxClue →Frequently Asked Questions
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