All about Income tax on Gifts received in India !

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Through this blog, we shall make you aware about all the details on Income tax on gifts received in India from relatives as well as non-relatives.

Your childhood days were the best days ,when you received a whole lot of gifts wrapped in love from your relatives and friends and you had nothing else to worry about.Just the excitement of opening them, that too before you go to bed.Wow!what an awesome feeling it was.

As you grow up,start earning for yourself and your family you need to keep in mind numerous things even while receiving a GIFT from someone.Yes,you heard it right we are talking about GIFT either in cash or in kind.

But,don’t worry,being an Individual or HUF,you just have to be aware of few important points while exchanging gifts.

Gifts from Relatives : As per Section 56(2) of the Income tax Act,GIFTS received either in cash or kind(movable or immovable property) ,from your relatives are fully exempt from tax.So,if you receive gifts in cash or in the form of goods from your relatives they will not be taxable in your hands.


The term “Relative” as per Income tax act includes :

a. Spouse of Individual.

b. Brother or sister of Individual

c. Brother or sister of spouse of Individual

d. Brother or sister of either of parents of Individual

e. Any lineal ascendant or descendant of Individual

f. Any lineal ascendant or descendant of spouse of Individual

g.Spouse of person referred to in clauses b to f.


Gifts can be in the form of :

  • Cash
  • Movable property:Jewellery,shares and securities,drawings,paintings,sculpture,archaeological collections,any work of art,bullion.
  • Immovable property:Land or building.

Gifts from Non relatives : Gifts received from non relatives are exempt from tax upto a maximum of Rs.50000 per financial year.The amount received in excess of Rs.50000 will be taxable in the hands of recipient if gift is from non relatives.Here,non relatives are persons that are not covered under points a to g above.

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Example : Mr.X receives cash gift of Rs.75000 from his friend Mr.A (a non relative).In this case,the gift is from a non relative and exceeds the monetary limit of Rs.50000.So,Rs.25000 (75000-50000)will be taxable in the hands of Mr.X.

Just keep in mind that gifts received on marriage is an exception wherein gift from a non relative is also exempt completely.

For further tax planning you can refer our famous blog : Tax Deduction U/s 80 C – Eligible Investments !


In addition to gifts from relatives,following Gifts received are exempt in the hands of recipient whether received in cash or any other form :

  1. Gifts received on the occasion of marriage of individual are exempt in the hands of recipient.No monetary limit has been attached to it.
  2. By way of will or inheritance.
  3. Gift in contemplation of death of donor.
  4. Gift from local authority.
  5. From any fund or foundation or educational institution or hospital or trust or institution U/s 12 AA.

Example : Mr.Z receives a cash gift of Rs.1 lakh from his father in law and Rs.75000 from his brother.His close friend gifts him a gold ring on his marriage.So,the total amount of Rs.175000 and gold ring both will be exempt from tax.


Further,it is advised that if you want to claim the benefit of tax exemptions ,you should have proper documentation.

  • Gifts in cash can be supported by a simple note on paper.
  • Gift in the form of movable property needs to be executed on stamp paper that should be notarized.
  • Gift in the form of immovable property ,you should have a registered gift deed executed.

So,next time you receive any gift, make sure you check the above rules that govern the taxation of gifts and land yourself in a safer zone.

Feel free to share your opinions and valuable comments thereupon !

Are you thinking to gift something to your loved ones, you can check some Really Great and Exclusive Deals at amazing prices.

Do Enjoy Reading  Employee Provident Fund (EPF) India: All you need to know

Also read our popular blogs : 7 Best Short term Investments and 7 Best Long term Investments

 

7 thoughts on “All about Income tax on Gifts received in India !”

  1. If I transfer 2 lakhs to my mom from my salary income and she invests and receives capital gain of 20k. So, how it will be taxable? Can I get an income tax exemption or can I file return on that 2 lakhs? Please clarify. Thanks!

    Reply
  2. I want to transfer big amount to my father’s account as he is a senior citizen now. The only reason to transfer that amount is being a senior citizen they do get better FD rate. The burden of interest which I would have generated at 30% tax slab would be cut off to a lesser tax slab. After 2 years I might want to get the amount back from my father. Can I follow this practice? Please do suggest more ways, if any. Should I show it as a gift deed on stamp or normal paper work would be fine?

    Reply
    • I have precisely same question. I Want to transfer some money to my mother to save tax and take it back after a couple of years. Can I do that legally? Please guide.

      Reply
  3. Hi,
    Thanks for the information.

    I have some questions regarding the same.

    My father sold out an agricultural land and gifted that money to purchase a flat. Which is registered on my name.also, he had provided me a 10 rs noterosed stamp which states that he received money from agricultural land and given to my son.

    I haven’t declared this gift in my itr. As gift from parents are non taxable.

    Now, I have received a notice from ITax to link that Transaction with my pan.

    Please help me about:
    1) I am not sure why they received that Transaction in AIR report. As I have made payment through cheque of my salary account?

    2) if I link my pan with Transaction, will they mark my name in scrutiny list?

    3) while owning that Transaction online, it asks to select any 1 option from below:
    # purchase of immovable property is out of sources which I have disclose in itr
    # no such Transaction was conducted
    # I want to avail benefit of income disclosure schemes 2016

    Please let me know what I should select.

    Reply

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