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ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
In India, gifts are subject to tax if they exceed ₹50,000 in a financial year and are not exempt under specific conditions. Gifts from close relatives or on occasions like marriages are generally tax-free, while others may be taxed as income.
Gifts are a way to show love, appreciation, or support. They can range from small tokens of gratitude to substantial financial or physical assets. However, when it comes to receiving gifts in India, the taxman keeps a watchful eye to ensure that certain gifts don’t slip through the cracks without being taxed.
In India, gift tax was initially introduced in 1958 under the Gift Tax Act. However, this act was abolished in 1998. But don’t start celebrating just yet—gifts are still taxable under the Income Tax Act of 1961. The rules now fall under the purview of this act, specifically under Section 56(2)(x).
To figure out how much tax you owe when you receive a gift, the Income Tax Act has guidelines for calculating the taxable value of gifts. Here’s a handy table that explains how to determine the taxable value of different types of monetary and non-monetary gifts:
Type of Gift |
Gift Tax Applicability |
Taxable Value of Gift |
Cheque, cash, or bank transfer |
If the value of the gift is more than ₹50,000 |
The entire amount of money received as gift |
Immovable property like building, land, etc., received without consideration (without making any payment) |
If stamp duty value of the gift is more than ₹50,000 |
Stamp duty value of the property received as a gift |
Immovable property for inadequate consideration (that is, property bought at a price lower than the stamp duty value of the property) |
If stamp duty value of the gifted immovable property exceeds the purchase price by more than ₹50,000 |
The difference between the stamp duty value and the purchase price of gifted property is taxable. |
Assets like shares, jewelry, paintings, sculptures, etc. without consideration (without making any payment) |
If the fair market value of the gift is ₹50,000 |
The fair market value of the gift |
Assets like shares, jewelry, paintings, sculptures, etc. for consideration (that is, purchased by the donor before being gifted) |
In case the fair market value of the gift exceeds the purchase price by more than ₹50,000 |
The difference between the fair market value and the purchase price of the present is taxable. |
Certain gifts you receive can indeed attract gift tax. But don’t worry—there are some important exceptions to this rule. Let’s break down these exceptions so you can understand when you might not have to pay tax on a gift.
Category of donee (recipient of the gift) |
Category of donor |
Occasion covered |
Individual |
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, spouse of any of the relatives mentioned here. |
NA |
Individual |
Any person |
Marriage of Individual |
Any person |
Any person |
Under a will or by way of inheritance |
Any person |
Individual |
In contemplation of death of donor or payer |
Any person |
Local authority - Panchayat, Municipality, Municipal Committee and District Board, Cantonment Board |
NA |
Any person |
From any fund of foundation or university or other educational institution or hospital or other medial institution referred to Section 10(23C) |
NA |
Any person |
Any charitable or religious trust registered under section 12A or section 12AA |
NA |
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. [Refer Section 10(23C) (iv) (v) (vi) and (via)] |
Any person |
NA |
Members of HUF HUF Any distribution of capital assets on the total or partial partition of a HUF |
HUF |
Any distribution |
A trust created or established solely for the benefit of the relative of the Individual |
Individual |
NA |
Gifts are always a wonderful part of life—whether it’s for a birthday, a wedding, or just a thoughtful gesture. But when it comes to gift tax, things can get a bit tricky. Understanding who you can receive gifts from without worrying about taxes is key. Let’s chat about the gift tax exemptions for different types of gifts and the relatives involved.
When it comes to gifts from friends, things can get a bit complicated. In India, if you receive gifts from someone who isn’t a close relative, and the total value of those gifts exceeds ₹50,000 in a financial year, you may need to pay tax on them. This includes cash, property, and other valuables.
Now, gifts from relatives are a whole different story! In fact, gifts received from specified relatives are completely exempt from tax, no matter how much they’re worth. So, who exactly qualifies as a “specified relative”?
This list is designed to ensure that financial support and gifts within close family circles don’t add to your tax burden. So, if you receive a substantial gift from one of these relatives, you can enjoy it without any worries about tax.
Gifts received on the occasion of marriage are treated very kindly under the tax laws. The good news is that any gifts you receive during your wedding—regardless of the amount or who gives them—are exempt from tax.
This means that whether it’s cash, jewelry, property, or any other valuable item, you don’t have to pay any tax on these gifts. It’s a nice way for the tax rules to acknowledge and celebrate one of life’s significant events. So go ahead and enjoy the generous gifts that come your way on your special day without stressing about taxes.
If you’re giving a gift to someone who isn’t a close relative, remember that the maximum amount you can transfer without triggering tax is ₹50,000. Anything over this amount will be taxed according to the receiver’s tax bracket.
But here’s a way to save on taxes: consider clubbing gifts. This strategy is particularly useful when gifting to close family members like parents, children, or in-laws. While the gift doesn’t increase your taxable income, any income generated from investing the gift money is taxed as the receiver’s income. So, your tax burden remains unaffected, and you don’t need to report it in your tax filings.
Just keep in mind that the income tax department closely watches gift transactions, especially when large amounts are involved. It’s a good idea to keep proper documentation to prove your gifts are genuine, especially when dealing with expensive items.
According to the current Income Tax rules, if you receive a gift, it’s considered a direct tax, meaning you’re responsible for declaring it and paying any applicable taxes.
To figure out how much tax you owe, you need to declare the value of the gift when you file your Income Tax Return under the “Income from Other Sources” section. The value of the gift is added to your total income for the year, and your tax liability is calculated based on your income tax slab rate.
1
Yes, gifts of immovable property, such as land or buildings, are taxable if the stamp duty value exceeds ₹50,000.
2
Yes, both cash gifts and non-cash gifts (like jewelry or property) are taxable if their value exceeds ₹50,000, but the tax treatment is similar in that they are both included in “Income from Other Sources.”
3
Yes, gifts received from non-residents are taxable if their value exceeds ₹50,000, similar to gifts received from residents.
4
Gifts received during festivals are taxable if their total value exceeds ₹50,000 unless they are from specified relatives or are exempt under specific conditions.
5
Yes, gifts made to registered charitable organizations can qualify for tax deductions under Section 80G of the Income Tax Act.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
