Tax On Gifts In India: Complete 2025 Guide

Giving and receiving gifts is a common part of Indian culture, especially among family and friends during festivals, weddings, birthdays, and other celebrations. However, many people are unaware that under Indian tax laws, receiving certain gifts can attract tax liability. Whether you give cash to your sister, property to your son, or jewellery to a friend, it’s crucial to know when a gift becomes taxable and how to comply as per the Income Tax Act, 1961.

This detailed article on tax on gifts in India in 2025 will clear all your doubts about the rules, exemptions, calculations, and compliance requirements. If you have ever wondered about income tax on gift money, gifts from relatives, or taxes on property received as a gift, this guide is for you.

What Is Gift Tax In India And When Does It Apply?

Gift tax in India refers to the tax payable by the recipient (donee) on money, property, or valuables received as a gift. While the Gift Tax Act 1958 was abolished in 1998, taxation of gifts received by individuals and Hindu Undivided Families (HUF) is now covered under Section 56(2)(x) of the Income Tax Act, 1961.

Who Has To Pay Tax On Gifts?

• The recipient is liable, not the giver.
• Applicable to individuals and HUFs in most cases.
• Indian residents and some non-resident Indians (NRIs) may have to pay, depending on circumstances.

Did you know? Even if the gift is received in cash, cheque, or through bank transfer, it can be taxable if it exceeds the threshold or does not qualify as exempt category.

Key Features Or Highlights of Gift Tax Rules (2025 Update)

• Any sum of money, movable property or immovable property received without consideration (or for inadequate consideration) may be treated as income.
• Unless exempted, gifts above a specified limit are taxable in the hands of the recipient.
• Gifts from relatives, on certain occasions, or up to a specific monetary threshold are exempt from tax.

When Are Gifts Taxable In India?

What Types of Gifts Are Covered Under Income Tax?

Gifts liable for tax include:

• Cash, cheque, or bank transfer
• Immovable property (like land, house, flat)
• Movable property (like shares, jewellery, bullion, cars, artwork)

When Does Gift Become Taxable?

If the total value of gifts received from NON RELATIVES during a financial year exceeds Rs. 50,000, the entire value is taxable as ‘Income from Other Sources’ in the hands of the recipient.

Example:

If you receive Rs. 40,000 from a friend and a gold watch worth Rs. 20,000 from another friend, the total gift value is Rs. 60,000. The entire Rs. 60,000 becomes taxable.

What Is The Exemption Limit For Gifts Under Income Tax Act?

Who Is Considered A Relative For Tax Free Gifts?

The Income Tax Act defines ‘relative’ as:

• Spouse of the individual
• Brother/sister of individual or spouse
• Brother/sister of either parent
• Any lineal ascendant or descendant of individual or spouse (e.g., parents, children, grandparents, grandchildren)
• Spouses of above relations

Gifts from these relatives, regardless of value, are completely exempt from tax.

Top Key Exemptions For Gift Tax In India:

• Gifts from relatives (as defined above)
• Marriage gifts from any person
• Gifts received by will or inheritance
• Gifts received from local authorities, registered charitable trusts, educational or medical institutions

Expert Insight: Gifts to or from friends, cousins, or distant relatives—who do not fit the income tax definition of ‘relative’—can be taxable if their value crosses Rs. 50,000 in a year.

Is There Gift Tax On Wedding Gifts?

Weddings are one of the biggest gifting occasions in India. Any gift received by an individual on the occasion of his/her marriage is fully tax exempt, whether the giver is a relative or non-relative, and no monetary limit applies.

How Are Gifts Taxed? Calculation & Table For 2025

How To Calculate Tax On Gift Received?

Calculation Example:

Suppose in one financial year, you receive:

• Rs. 25,000 cash from a friend
• Rs. 45,000 as a bank transfer from a colleague
• Total = Rs. 70,000 (from non-relatives)
• Since Rs. 70,000>50,000, the full Rs. 70,000 will be taxed.

What About Gifts Below Rs. 50,000?

• If aggregate value of all gifts from non-relatives is Rs. 50,000 or less in a financial year, it is NOT taxed.

People also ask: What if I get multiple gifts totaling just under Rs. 50,000?
If gifts from all non-relatives together remain below Rs. 50,000, there is no tax on gifts received in India.

Tax On Immovable Property Received As Gift

How Is Gift Tax Calculated On House, Land, Or Flat?

If you receive immovable property (like land or a flat) as a gift from a non-relative:

• If acquired without any consideration and the stamp duty value exceeds Rs. 50,000, the entire stamp duty value becomes taxable.
• If received at a price much lower than stamp duty value (Difference > Rs. 50,000), the difference is taxable as income.

Property Gift To Spouse, Children Or Parents

If property is gifted to a defined relative, it is not taxable for the receiver, regardless of value.

Did you know? When parents gift property to children, there is no tax for the child, but any income (rent, capital gain) earned from the property may be taxable later.

Tax On Monetary Gifts (Cash, Cheque, Bank Transfer, UPI)

Can I Receive Cash Gifts Without Attracting Tax?

Cash gifts above Rs. 50,000 from non-relatives are taxable. For audit or investigation, keeping a record of the gift deed (even for cash) is recommended. UPI, NEFT, cheque etc. are considered as money gifts and follow the same rule.

Gifts from Online Transfers or Digital Wallets

Whether the gift is sent via Paytm, PhonePe, Google Pay, online bank transfer or cheque – rules remain the same. The mode of receipt does not affect taxability.

Expert Insight: Digital transaction records help prove the genuineness of gift sources during scrutiny by the Income Tax Department.

Taxation Of Gifts To And From Non Resident Indians (NRIs)

What Are The Gift Tax Rules For NRIs?

• Gifts received by an NRI from a resident Indian can be taxable in India if above Rs. 50,000 and not from a specified relative.
• Gifts sent to family members abroad are exempt, provided the recipient is a relative.
• NRIs gifting to Indian residents: tax is liable in the receiver’s hands as per normal resident rules.

Double Tax Avoidance Agreement (DTAA) For Gifts

Some countries have DTAA benefits with India. If the gift is taxed in both countries, tax relief may be available.

People Also Ask:

If my father living in USA gifts me money, is it taxed in India?

No, gifts from a parent (relative) are tax-free in India irrespective of the amount.

Pros And Cons Of The Current Gift Tax Law

What Are The Pros (Benefits)?

• Exemption for genuine gifts from family or on marriage encourages tradition and support.
• Clear rules prevent misuse of gifting as a means for unaccounted money circulation.
• No upper cap on tax free gifts from relatives, easing family transfers.
• No double taxation for gifts received by will or inheritance.

What Are The Common Drawbacks (Cons)?

• The definition of ‘relative’ is narrow; friends or distant family not covered.
• Stamp duty valuation for property can result in unexpected tax liability.
• Complex calculations when receiving part consideration transfers.
• Increased reporting burden for large or cumulative small gifts.

How To Disclose Gifts In Income Tax Return?

Should I Mention Gifts In My Income Tax Filing? How?

• All taxable gifts must be declared under ‘Income from Other Sources’ in ITR 1 or ITR 2 form.
• Maintain supporting documents like gift deed, ID proof, PAN/Aadhaar of donor if possible.
• Gifts from relatives, on marriage, or inheritance need not be shown, but voluntary disclosure is good for clarity.

Table: Disclosure Requirement for Different Gift Types (2025)

Did you know? TDS is not applicable on gifts. The entire amount must be reported as income if taxable.

First Hand Experience: Real Life Gift Taxation Story

When I got married in 2024, I received gifts amounting to nearly Rs. 2 lakh in cash, gold, and cheques from family, friends and colleagues. I kept a record of every gift and who gave it. Since all gifts on marriage are tax-free, I did not report them in my tax return but kept a list ready in case of scrutiny. Later, I recommended my cousin do the same when he got a flat from his grandfather as a wedding gift in 2025. Since the property came from a lineal ascendant, there was no tax, and he saved by avoiding stamp duty on market value. It’s always helpful to talk to a tax expert for such big gifts.

Frequently Made Mistakes In Gift Tax Compliance

• Considering all friends as relatives for tax exemption
• Not clubbing all gift amounts from non-relatives for total value calculation
• Forgetting to declare taxable gifts in ITR
• Not maintaining proper documentation for high-value gifts

Expert Insight: Many people use gift as a medium of transferring income to avoid tax. The income earned from the gifted asset (like interest or rent) may be clubbed with donor’s income if rules apply. Always check Section 64 for clubbing provisions.

Key Things To Remember For Gift Tax (2025)

• Gifts from defined relatives or on marriage are not taxed, whatever the amount.
• Gifts from non-relatives above Rs. 50,000 are fully taxable, not just the excess.
• Always keep records of all high-value gifts, including documentation and the reason for gifting.
• Double check your ITR disclosure if you receive or plan to give large gifts.

People Also Ask:

Is gift money received from mother taxable in India?

No, gifts from your mother are tax-free as she is a close relative under the Income Tax definition.

Do I have to pay tax if I gift Rs. 1 lakh to my brother?

No, gifts to or from brother/sister are always tax-free for any amount in India.

What is the gift tax on property received from uncle?

If the uncle is your father’s or mother’s brother, he qualifies as a relative and so property received is not taxed.

Are online gifts or bank transferred gifts covered under tax rules?

Yes, any gift amount above Rs. 50,000 from a non-relative through digital means is taxable.

How To Choose The Best Way To Gift In 2025?

When considering gifting property, gold, or cash in families, consult a tax expert, compare methods, and evaluate documentation requirements. For significant transfers, compare services from online marketplaces that provide legal documentation or property transfer solutions, often giving you a side by side comparison from multiple reputed companies.

Did you know? Big gifting platforms in India now help generate digital gift deeds for asset transfers and compare financial products for smoother compliance.

Quick Recap (TLDR)

• Gifts from relatives or on marriage are tax-free.
• Gifts above Rs. 50,000 from non-relatives are fully taxable.
• All modes of receiving gifts (cash, cheque, online, UPI, property) are covered.
• Always record and disclose taxable gifts in your ITR.
• Double check definitions and exemptions before making or accepting large gifts.

People Also Ask (FAQs)

What is the maximum gift amount in India without tax?

You can get up to Rs. 50,000 from all non-relatives in a year without paying tax. No limit applies for gifts from relatives or on marriage.

If I receive Rs. 80,000 from my cousin, is it taxable?

Yes, cousins are not counted as close relatives for exemption. The entire amount is taxable.

Is there any tax on gold or jewellery gifted by parents?

No. If you get gold or jewellery from parents, it is not taxed.

What about car or bike gifted by friend?

If the car or bike value exceeds Rs. 50,000 and is gifted by a non-relative, it is taxable as per market value.

Can I reduce my tax by showing gifts?

Gifts from relatives or on marriage do not impact your tax. But using fake gifts to reduce tax is illegal and can be penalized if detected.

For the most up to date legal provisions or special cases, consult an experienced income tax consultant or refer to the official Income Tax India website for 2025 rules.
Sources:
Income Tax Act, 1961 Section 56(2)(x)
Income Tax India Gift Rules 2025