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Gift tax rules in India 2026: gifts from relatives, the ₹50,000 limit and clubbing
When gifts are taxed under the Income-tax Act, 2025: relatives exempt, the ₹50,000 rule for others, property gifts, stamp duty and clubbing.
India has had no separate gift tax since the Gift-tax Act stopped applying to gifts made on or after 1 October 1998. Instead, the recipient may be taxed under "income from other sources". Under section 92(2)(m) of the Income-tax Act, 2025, money or property received without consideration is taxable in full if its total value in the tax year exceeds ₹50,000. But gifts from a relative, gifts received on your marriage, and receipts under a will or by inheritance are exempt, whatever the amount (section 92(3)). The donor pays no income tax on the gift. Two catches remain: stamp duty on gift deeds of immovable property, and clubbing, under which income from assets gifted to a spouse or daughter-in-law may be taxed in the donor's hands.
This guide is part of the estate planning checklist. For inherited assets, see inherited property tax.
Who counts as a "relative"
For an individual, the Act's definition of relative includes:
- Spouse
- Brother or sister
- Brother or sister of the spouse
- Brother or sister of either parent
- Any lineal ascendant or descendant (parents, grandparents, children, grandchildren)
- Any lineal ascendant or descendant of the spouse
- The spouse of any of the persons above
For a Hindu Undivided Family, any member of the HUF is a relative (see HUF basics). Friends, cousins, nieces and nephews are not relatives under this definition, so their gifts count towards the ₹50,000 limit. Note the asymmetry: an uncle (your parent's brother) is your relative, but you are not his relative under the same list, because a nephew is not listed for him.
What the ₹50,000 rule covers
| Type of gift from a non-relative | Taxable when |
|---|---|
| Money (cash, transfer, cheque) | Aggregate in the year exceeds ₹50,000: the whole amount is taxed |
| Immovable property without consideration | Stamp duty value exceeds ₹50,000: the stamp duty value is taxed |
| Immovable property for inadequate consideration | Stamp duty value exceeds the price by more than the higher of ₹50,000 and 10% of the price: the difference is taxed |
| Movable property (shares, jewellery, art, bullion) without consideration | Fair market value exceeds ₹50,000 in aggregate: the value is taxed |
| Movable property for inadequate consideration | Difference exceeds ₹50,000: the difference is taxed |
Other exempt receipts include gifts from a local authority, from certain registered charities, through specified transactions that are not transfers, and from a trust created solely for the benefit of the recipient's relatives.
Worked examples (illustrative)
Example 1: wedding gifts. Priya receives ₹3,00,000 in cash and gold from friends and colleagues on her wedding. Gifts received on the occasion of the individual's marriage are exempt, whatever the donor. Tax: nil. Keep a list of donors and amounts in case of questions.
Example 2: birthday gifts from friends. Arun receives ₹30,000 from one friend and ₹25,000 from another in the same year. The total, ₹55,000, exceeds ₹50,000, so the whole ₹55,000 is taxable at his slab rate. Had the total been ₹50,000, nothing would be taxed.
Example 3: a flat from an aunt. Sameer's mother's sister gifts him a flat worth ₹75 lakh. The mother's sister is a relative, so there is no income tax. He must still pay stamp duty and registration on the gift deed under his state's law; many states charge a concessional rate for gifts to close family members.
Example 4: shares from a friend at a discount. A friend sells Kiran shares worth ₹4,00,000 for ₹2,50,000. The difference, ₹1,50,000, exceeds ₹50,000, so ₹1,50,000 is taxable as other income.
Gift deeds for property
- A gift of immovable property must be made by a registered instrument signed by the donor and attested by two witnesses (Transfer of Property Act, 1882, s. 123). The donee must accept it during the donor's lifetime.
- Stamp duty is set by each state. Check your state's stamp schedule; concessions for family gifts vary greatly.
- A Muslim hiba of property follows Muslim law on declaration, acceptance and possession; see Muslim inheritance.
- Once accepted, a gift generally cannot be revoked, except in the narrow cases in section 126 of the Transfer of Property Act, or under the Senior Citizens Act where a condition to look after the donor is broken. See the Senior Citizens Act guide.
Clubbing: when the donor pays tax on the income
Under section 99 of the Income-tax Act, 2025 (old s. 64), income from assets transferred without adequate consideration is added to the donor's income in some cases:
| Gift to | Income from the gifted asset is taxed in |
|---|---|
| Spouse (except under an agreement to live apart) | Donor's hands |
| Son's wife | Donor's hands |
| Minor child | Parent with the higher income (small exemption per child) |
| Adult child, parent, sibling | Recipient's hands; no clubbing |
Example 5. Vikram gifts ₹10 lakh to his wife, who puts it in an FD earning ₹70,000 a year. The ₹70,000 is clubbed with Vikram's income. If she reinvests the interest, income on that interest is generally hers.
Cost for later sale
When you later sell a gifted asset, your cost is the donor's cost and your holding period includes the donor's, as for inherited property. Where a gift was taxed under section 92 when received, the value taxed is generally your cost instead.
Frequently asked questions
Is there a limit on gifts from my parents?
No. Parents are relatives. Any amount of money or property from them is exempt from income tax. Keep a gift letter or deed and bank records.
Are gifts to an NRI child taxed?
Gifts from a resident relative to an NRI relative are exempt in the recipient's hands. Remittances abroad must follow the RBI's Liberalised Remittance Scheme and may attract TCS. Check current limits.
Is a gift from my cousin taxable?
A cousin is not a relative under the Act. If gifts from cousins and other non-relatives total more than ₹50,000 in the year, the whole amount is taxable.
Does the donor need to report a gift?
There is no gift tax return. Large cash gifts may be restricted by the cash-transaction rules, so use banking channels.
Sources
- Income Tax Department — Income-tax Act, 2025, ss. 92 and 99
- Income Tax e-Filing portal — reporting other income
- India Code — Transfer of Property Act, 1882, ss. 122–126
- Reserve Bank of India — Liberalised Remittance Scheme
