How are Gifts Taxed? - Gift Tax Exemption Relatives List

By CA Mohammed S Chokhawala

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Updated on: Jul 3rd, 2025

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3 min read

Gifts are treated as income under the Income Tax Act. If the value of the gift exceeds certain limits, it may be taxed as “Income from Other Sources”. However, there are certain exemptions available if gifts are received from certain persons or on certain occasions. Gifts received within a value of Rs. 50,000 is always exempt. 

In this article, we’ll help you understand how gift taxation works—what types of gifts are taxable, what the thresholds are, and what exemptions might apply.

Tax on Gifts

Gift Taxation in India

As per Section 56 of the Income-tax Act,1961 gifts received by any person or persons are taxed in the hands of the recipient under the head ‘Income from other sources’ at normal tax rates. We have discussed below what kind of gifts are covered and their quantum to be taxed.

Threshold Limits for Exemption and Taxability of Gifts

The provisions relating to gift tax have been dealt with under Section 56(2)(vii) of the Income Tax Act, 1961. These provisions have been briefly captured in the form of the table below:

Kind of gift coveredMonetary threshold for exemptionQuantum taxable on exceeding threshold
Any sum of money without considerationSum > Rs.50,000The entire sum of money received.
Any immovable property such as land, building, etc., without considerationStamp duty value* > Rs.50,000Stamp duty value of the property**
Any immovable property for inadequate considerationStamp duty value* exceeds consideration by > Rs.50,000Stamp duty value Minus consideration.
Any property (jewellery, shares, drawings, etc.) other than an immovable property without considerationFair market value *(FMV) > Rs.50,000FMV of such property
Any property other than immovable property for considerationFMV exceeds consideration by > Rs.50,000FMV Minus consideration (The same example in the case of immovable property can 

*Value adopted by stamp duty authority for the purpose of stamp duty.

**Example 1:Stamp duty value Rs.2 lakhs Consideration Rs.75,000. The taxable amount is Rs.1.25 lakh (stamp duty value exceeds consideration by > Rs.50,000)  
Example 2 In Example 1, if consideration  is Rs.1.6 lakh, the taxable gift is Nil as stamp duty value does not exceed consideration by > Rs.50,000

Provisions Relating to Stamp Duty

Provisions relating to considering the stamp duty value are similar to the provisions as per Section 50C.  Let us discuss the provision for the purpose of gift tax in brief below:

  • For the purpose of gift tax, stamp duty value as of the date of agreement fixing the consideration needs to be considered if the following conditions are satisfied:
    • The date of such agreement and the date of registration are different; and
    • Consideration, either fully or in part, is paid by way of an account payee cheque or bank draft or by using an electronic mode on or before the date of agreement for transfer.
  • In case the taxpayer has questioned or disputed the stamp duty value, the tax officer is required to refer the valuation to a valuation officer (VO) as per Section 50C.The VO is required to pass an order in writing of value he has arrived. 
  • For the purpose of gift tax, a lower stamp duty value or value arrived by VO is required to be adopted.
  • For immovable property, where the stamp duty value of property exceeds the consideration received, then up to 10% of such consideration will be provided relaxation , and it will not be considered as income from other sources.

Tip: Whenever gifts are crossing the threshold limit, or becomes taxable, it is recommended to prepare a gift deed and document the same safely. This will be a proof for the source of the gift income, which can be used as a response against tax notices.

Exemptions - Gift Taxation

As mentioned above, certain specified gifts received by any person from any person(s) attract gift tax. However, here are some exceptions to this.

Gifts Exempt on Specified Occasions

Gifts received on the following occasions are exempt, irrespective of from whom the gift is received:

  • Marriage of Individual
  • Under a will or by way of inheritance
  • In contemplation of death of donor or payer
  • Any distribution of capital assets on total or partial partition of a HUF (only members of HUF are exempt in this case)

Gifts Exempt - Received from Specified Persons

  • Relative – 
    • spouse, 
    • brother and sister of self and spouse, 
    • brother or sister of parents or parents-in-law, 
    • any lineal ascendant or descendant of self or spouse and
    • spouse of any of the relatives.
  • Local authority – Panchayat, Municipality, Municipal Committee and District Board, Cantonment Board
  • Any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to Section 10(23C)
  • Any charitable or religious trust registered under section 12A or section 12AA

Gifts Exempt - Received by Specified Institutions

  • Any fund or trust or institution or any university or other educational institution or any hospital or other medical institution established for charitable/religious/educational /philanthropic purpose and approved by the prescribed authority. 
  • Trust created or established solely for the benefit of the relative of the Individual (when received from the individual concern)

Summary

A summarised table showing the above provisions is presented below:

Category of Donee (recipient of the gift)Category of DonorOccasion covered
Individual Relative NA
IndividualAny personMarriage of Individual
Any personAny personUnder a will or by way of inheritance
Any personIndividualIn contemplation of death of donor or payer
Any personLocal authorityNA
Any personFrom any institution referred to Section 10(23C)NA
Any personAny  trust registered under section 12A or section 12AANA
Any charitable or religious and other trust [Refer Section 10(23C) (iv) (v) (vi) and (via)Any personNA
Members of HUFHUFAny distribution of capital assets on total or partial partition of a HUF
Trust created or established solely for the benefit of the relative of the IndividualIndividualNA

General caution: Due to extensive tax planning using gifts, gifts in India generally fall under the scrutiny of the tax department, especially if the quantum is huge. Hence, it may be advisable to maintain documentation to establish the genuineness of the gift received and sufficient source of funds with the donor to justify the gift.

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Frequently Asked Questions

I have received a gift of Rs 10 lakhs from my brother. Is this taxable?

Brother is a relative as per the definition in the Income-tax act. Thus any gift received from the brother is non-taxable. 

I have received a gift from a relative. Where should I show this in ITR ?

Gift received from Relative is non taxable. Thus such amount need not be shown in your ITR.

Is gift tax abolished in India?

Yes, gift tax was abolished in 1998 and all the gifts made there from were tax free.

How much gift received from relative is tax free in India?

Any amount of gift received by an individual from relatives is tax free in India.

Is gift from friend taxable?

Yes , Any gift from a friend exceeding Rs 50,000 will be taxable. However any gift less than Rs 50,000 is tax free.

How can I save tax by gifting ?

It is not possible to save tax by gifting. However gifting by itself among relative is non taxable without any upper limit. And gift upto Rs 50,000 is not taxable in other cases.

What is the limit of cash gift from parents?

Any gift from a relative (Including parents) is non taxable. However receipt of gift in the mode of cash exceeding Rs 2 lakhs is not permissible as per provision of section 269ST, violation of which can attract penalty

Who is exempt from gift tax?

Any gift from relatives are non taxable. Also any gift of other than relatives (eg. friends ) is tax free upto limit of Rs 50,000. Such gift can be in cash or in kind.

Are gifts received during marriages exempt?

Under The Income Tax Act, gift received by the couple in the event of marriage except those received in cash a sum of Rs.2 Lakhs or more as provided under Section 269ST.age is exempt .

Can I save tax be transferring money as a gift to wife's account?

No, the amount given as gift to wife is exempt from tax in wife's hands, but it will still be taxable for husband. Any income from such gift transferred will be taxed in husband's hands

About the Author
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CA Mohammed S Chokhawala

Content Writer
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I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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