Tax On Gifts In India: All You Need To Know 2025

Exchange and acceptance of gifts is a normal aspect of Indian culture particularly among family and friends in festivals, weddings, birthdays and other festivities. Nevertheless, what most individuals do not know is that under the Indian tax laws, the receipt of specific gifts can subject one to taxation. 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 elaborate article on tax on gifts in India 2025 will dispel all your confusion about the provisions, exemptions, computations, and compliance. This is a guide to you in case you have ever asked yourself whether there is any income tax on gift money, whether there is any tax on gifts given to you by relatives or whether there is any tax on the property given to you as a gift.

What is Gift Tax in India and at what point?

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 Is Liable To Pay Tax On Gifts?

• It is the receiver who is accountable and not the donor.
• Most of the cases can be applied to individuals and HUF.
• Indian residents and some non-resident Indians (NRIs) may have to pay, depending on circumstances.

You know, in the U.S.A. it is said that: Although the gift may be given as cash, cheque or by way of bank transfer, it may be taxable provided it exceeds the threshold or does not fall under 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.
• Except under exemptions, gifts in excess of an amount may be taxed in the hands of the recipient.
• Relatives are exempted to pay the gift tax on some occasions, or up to a certain amount of money.

At what point do Gifts become Taxable in India?

Gifts that are subject to tax are:

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

At what point does Gift become Taxable?

In case the aggregate amount of gifts received by a person in a financial year by NON RELATIVES is more than Rs. 50,000, the whole amount is to be taxed as Income under the head Other Source in the hands of the person receiving the gifts.

Example:
In case you get Rs. 40,000 as a gift by a friend and a gold watch worth Rs. 20,000 by another friend, the combined value of the gifts is Rs. 60,000. The whole Rs. 60,000 is taxable.

How Much Is The Exemption Limit On Gifts Under Income Tax Act?

Income Tax Act defines the term relative to mean:

• The individual spouse
• Sibling of self or husband/wife
• Either brother/sister of either parent
• Any lineal ascendant or descendant of individual or spouse (e.g., parents, children, grandparents, grandchildren)
• Above relation spouses

Such gifts by these relatives are entirely tax-free, no matter the value.

Best Important Exemptions Of Gift Tax In India:

• Gifts from relatives (as defined above)
• The gifts of marriage by any one person
• Wills and gifts of inheritance
• Gifts made by local authorities or registered charitable trusts or educational or medical institutions

Expert Insight: Gifts to/by friends, cousins, or distant relatives- who do not fall in the income tax definition of a relative- may be taxable where the value exceeds Rs. 50,000 in a year.

Is Gift Tax On Wedding Gifts?

One of the largest gifting occasions in India is the weddings. Any gift that an individual obtains during his/her marriage is completely tax exempt, regardless of who the giver is a relative or non-relative, and no monetary restriction is applied.

What Is The Taxation Of Gifts? Table & Calculation To 2025

Calculation Example:

Suppose you are getting in one financial year:

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

But What Of Gifts Less Than Rs. 50,000?

When aggregate value of all gifts made by non-relatives is Rs. 50,000 or below in a financial year, then it is NOT taxed.

What will happen, people wonder, when I receive several gifts, each of which is slightly less than Rs. 50,000?

In case gifts received by a person in India do not exceed Rs. 50,000 in total by all non-relatives, no gift tax is levied.

Tax On Immovable Property Acquired On Gift

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

• When it is acquired without any consideration and the stamp duty value is above Rs. 50,000 then the whole amount of stamp duty becomes taxable.
• If received at a price much lower than stamp duty value (Difference > Rs. 50,000), the difference is taxable as income.

Gift Of Property To A Spouse, Children Or Parents

When the property is given as a gift to a specified family member it is not subject to tax to the recipient, no matter the value.

And you did not 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)

Gifts of cash more than Rs. 50,000 are taxable by non-relatives. For audit or investigation, keeping a record of the gift deed (even for cash) is recommended. UPI, NEFT, cheque etc. can be regarded as money gifts and the same rule applies.

Online Transfers or Digital Wallets Gifts

It does not matter whether a gift is sent through Paytm, PhonePe, Google Pay, online bank transfer or cheque - rules are the same. Taxability is independent of mode of receipt.

Expert Speak: Digital transaction records can be used to show the authenticity of the sources of gifts when there is an inquiry by the Income Tax Department.

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

• An NRI may have to pay tax in India on gifts received by him/her in India in excess of Rs. 50,000 and in addition, not given by a specified relative.
• Gifts that are sent to the family members who are living outside the country are not subjected to taxation, as long as the recipient is a relative.
• Gift to resident of India by NRI: the tax is charged in the hands of the receiver under the normal rules of residence.

Double Tax Avoidance Agreement (DTAA) For Gifts

There are DTAA benefits with India in some countries. Tax relief can be applied in case the gift is taxed on both sides.

People Also Ask:
When my father in USA, gives me money as a gift, does it get taxed in India?
No, gifts from a parent (relative) are tax-free in India irrespective of the amount.

The Advantages And Disadvantages Of The Gift Tax Law is given below

Pros:

• Genuine gifts by the family or on marriage are exempted thus promoting tradition and support.
• Easy regulations thwart the possibility of using gifting as an avenue of circulating unaccounted money.
• The tax free gifts by relatives have no upper limit, which facilitates family transfers.
• No gift by will or inheritance to be charged twice.

Cons:

• The term relative is limited in definition; friends or faraway relatives excluded.
• Unexpected liability of tax can be caused by stamp duty valuation of property.
• Intricate calculations when taking part consideration.
• Greater reporting load on large or aggregate small gifts.

Income Tax Return Disclosure Of Gifts

• Any taxable gift is to be reported under the head of income of other sources in ITR 1 or ITR 2 form.
• Keep supportive records such as gift deed, ID proof, PAN/Aadhaar of donor as far as possible.
• Gifts by relatives, on marriage, or by will, do not have to be disclosed, but the voluntary disclosure is good to make it more open.

Table: Disclosure Requirement for Different Gift Types (2025)

Did you know? Gifts do not attract TDS. This has to be reported in full as income when it is taxable.

First hand Experience: Real Life Gift Taxation Story

My family, friends and colleagues gave me gifts worth an approximate of Rs. 2 lakh in cash, gold and cheques when I got married in 2024. I made a list of all of the presents and who gave them. All gifts on marriage are tax-free and as such I did not include them in my tax return but had a list at hand in case I was being checked. I suggested the same to my cousin later when he received a flat as a wedding gift in 2025 by his grandfather. There was no tax because the property was inherited by a lineal ascendant and he saved on stamp duty on market value. Such large gifts are always good to have a chat with a tax expert.

Common Errors In Gift Tax Compliance

• Treating all friends as members of the family in order to exempt tax
• This is not grouping all the amounts of gifts given by non-relatives to calculate the total value of gifts
• Ignoring to report taxable gifts in ITR
• Failure to keep appropriate records of high value gifts

Expert Insight: Gift is a common way that people use to transfer their income so as to escape tax. The income earned from the gifted asset (like interest or rent) may be clubbed with donor’s income if rules apply. Look at Section 64 where there is provision of clubbing.

Key Things To Remember For Gift Tax (2025)

• Whatever the amount gifts made by specified relatives or on marriage are not taxed.
• Any non-relative gift received beyond Rs. 50,000 is not taxed only on the amount in excess of the limit.
• All high-value gifts should be documented and always record the reason that they were given.
• Review your ITR disclosure again in case you get or intend to make large gifts.

People Also Ask:

• Does mother gift money in India tax?
  No, gifts of your mother are not taxable because she is a close relative in the definition provided by the Income Tax.

• Will I become liable to tax in case I give Rs. 1 lakh to my brother as a gift?
  Not at all, brother/sister gifts are never taxed no matter the amount in India.

• How much is the property received by uncle as a gift?
  When the uncle is the sibling of your father or mother, he is a relative and as such, property obtained is not subject to tax.

• Does tax rule cover online gifts or bank transferred gifts?
  Yes, it is taxable and any gift that is given by a non-relative in excess of Rs. 50,000 by way of digital media is subject to tax.

The Best Way To Gift In 2025 How To Choose?

In regards to the gift of property, gold or cash within families, seek advice of a tax expert, compare the approaches, and consider the documentation needs. In large transfers you should compare the services of online marketplaces that offer legal documentation or property transfer services and will often provide a side by side comparison with several well-known companies.

Did you know? Large gifting platforms in India are used now to create digital gift deeds of assets transfer and compare financial products to ensure easier compliance.

Quick Recap (TLDR)

• Relatives are tax free when gifting or on marriage.
• Gifts, which are made by non-relatives to a value exceeding Rs. 50,000, would be a hundred percent taxable.
• All modes of receiving gifts (cash, cheque, online, UPI, property) are covered.
• Never forget to report and declare taxable gift in your ITR.
• Be sure to review definitions and exemptions prior to making or accepting large gifts.

People Also Ask (FAQs)

• What is tax-free gift limit in India?
  You are not liable to be taxed on an amount of up to Rs. 50,000 received by you in a year by all non-relatives. There is no cap on gift given by family members or on marriage.

• Suppose I get Rs. 80,000 as a gift of my cousin, is it taxable?
  Yes, cousins are not close relatives that can be exempted. The whole amount is subject to taxation.

• Does gold or jewellery given by parents attract any tax?
  No. When parents give you gold or jewellery, this is not charged.

• Car/bike given by friend?
  When the value of cars or bike is more than Rs. 50,000 and is given by a person who is not a relative, then it is liable to tax by market value.

• Am I able to deduct my tax using gifts?
  Gifts by relatives or at marriage have no effect on your tax. However, the reduction of tax through false gifts is illegal and may be punished in case it is found.

To be perfectly sure of the latest legal provision or special cases, refer to an experienced income tax consultant or the official Income Tax India site 2025 rules.

Sources:

• Income Tax Act, 1961 Section 56(2)(x)
• Gift Rules 2025 Income Tax India