Tax on Gifts in India: ₹50,000 Rule and Relatives List

India has no separate gift tax. Instead, a gift you receive is taxed as your income if it comes from a non-relative and gifts of that kind total more than ₹50,000 in a tax year. Then the entire amount is taxable at your slab rate. Gifts from relatives, gifts on your own marriage and inheritances are exempt in any amount. As of October 2026, this rule is in Section 92(2)(m) of the Income-tax Act, 2025 (old Section 56(2)(x)).

The basic rule

Under the Income-tax Act, 2025, which applies from tax year 2026-27, a gift received "without consideration" is income from other sources if it is:

Two features catch people out:

• ₹50,000 is a threshold, not a deduction. At ₹50,000 nothing is taxed. At ₹50,001 everything is taxed.
• It is aggregated. Small gifts from many friends add up across the tax year.

Gifts of items outside the list, such as a phone, a car or clothes, are not taxed under this rule, though a car received from an employer is a perquisite taxed as salary.

Who counts as a "relative"

Gifts from these people are exempt whatever the amount:

• Your spouse
• Your brother or sister
• Your spouse's brother or sister
• Brother or sister of either of your parents (your uncles and aunts by blood)
• Any lineal ascendant or descendant: parents, grandparents, children, grandchildren, on both the maternal and paternal side
• Any lineal ascendant or descendant of your spouse
• The spouse of any person listed above

Commentary on the 2025 Act notes that it expressly covers both maternal and paternal lines, settling an old doubt about gifts from maternal grandparents. Not relatives: cousins, nephews, nieces, friends, colleagues, and your brother-in-law's or sister-in-law's own relatives beyond the list. A gift from a cousin is therefore treated like a gift from a friend.

Occasions that are always exempt

Whatever the relationship, gifts are exempt if received:

• On the occasion of your own marriage (not a birthday, anniversary or someone else's wedding)
• Under a will or by inheritance
• In contemplation of death of the giver
• From a local authority, or from certain registered charitable trusts and institutions
• In a few other specified situations, such as transfers in certain business reorganisations

Worked example: when friendly gifts add up

Priya, a salaried employee on the new regime, has taxable salary income of ₹15,00,000 for tax year 2026-27. During the year she receives:

Gifts from non-relatives: ₹30,000 + ₹25,000 + ₹2,00,000 = ₹2,55,000. That exceeds ₹50,000, so the whole ₹2,55,000 is taxable.

Her income rises from ₹15,00,000 to ₹17,55,000. Illustrative extra tax at new-regime slabs:

• ₹15,00,000 to ₹16,00,000 at 15%: ₹15,000
• ₹16,00,000 to ₹17,55,000 at 20%: ₹31,000
• Extra tax before cess: ₹46,000
• Cess at 4%: ₹1,840
• Extra tax: ₹47,840

Had the cousin's ₹2 lakh come from her uncle instead, the non-relative total would have been ₹55,000, still above the threshold and fully taxable. Below ₹50,000 in total, nothing would be taxed.

Gifts within the family: clubbing of income

The gift itself may be exempt, but the income from it may be taxed in the giver's hands. Under the clubbing provisions (Section 99 of the 2025 Act, old Section 64):

• If you gift money or assets to your spouse without adequate consideration, income from those assets (interest, dividends, rent) is added to your income.
• The same applies to gifts to your son's wife.
• Income of a minor child is generally clubbed with the parent who earns more, with a small exemption per child.

Gifts to adult children and parents are not clubbed. That is why some families gift to a parent in a lower slab who then invests in their own name. Keep the transfer genuine and documented. Gifting to a spouse also has implications for joint planning; see joint vs separate bank accounts for couples.

Practical points

Document it. For significant gifts, write a simple gift deed or letter stating the giver, receiver, relationship, amount and that it is given out of love and affection without consideration. Transfer through the bank, not cash.

Cash limits. Separately from income tax, accepting ₹2 lakh or more in cash from one person in a day, for one transaction or one event, is barred by the cash-receipt rule (old Section 269ST), with a penalty equal to the amount received. Wedding cash gifts from many guests are each judged separately, but large cash gifts from one person should go through the bank.

Immovable property. A gift of property from a relative is exempt from income tax but usually attracts state stamp duty, often at concessional rates for family gifts. A gift deed must be registered.

Gifts from abroad. A resident can receive gifts from an NRI relative freely, and the same exemption rules apply. A gift sent by a resident to a non-resident may be treated as income arising in India for the receiver if it is from a non-relative. Outward gifts also count towards the Liberalised Remittance Scheme limit; see documents for sending money abroad.

Loans versus gifts. Money lent to a friend is not a gift, but money "lent" with no agreement and never repaid can be questioned. Our guide on lending money to friends and family covers how to paper it.

Reporting. Taxable gifts go under income from other sources in your ITR. Large exempt gifts belong in the exempt income schedule where the form provides for it. Banks report large deposits in your AIS, so unexplained credits can lead to queries. Estimate the effect with the income tax calculator.

Key takeaways

• As of October 2026, gifts are taxed as income under Section 92(2)(m) of the Income-tax Act, 2025 (old Section 56(2)(x)).
• Gifts from non-relatives above ₹50,000 in total in a tax year are taxable in full at slab rates.
• Gifts from relatives as defined, on your own marriage, or by will or inheritance are exempt in any amount.
• Cousins, nephews, nieces and friends are not relatives.
• Income from gifts to a spouse or daughter-in-law is clubbed with the giver's income under Section 99 (old Section 64).