Tax on Gifts in India FY 2025-26

Be it about expressing love to your grandchild or presenting a token of gratitude, gifting is one of the simplest options. But in India, gifts are not always just heartwarming; they come with tax implications, too. However, this does not mean that you will have to avoid gifting altogether. Understanding tax on gifts in India can assist you in planning wisely. It will help avoid surprises at tax time.

So, let us get into the details of what counts as a gift and when it becomes taxable. We will also go through the good news of exemptions and how to calculate tax on gifts.

What Is Considered a Gift in India?

Under the Income Tax Act, 1961, a gift is defined as money or property received without consideration (i.e., without paying for it) from any person or organisation. Gifts can come in various forms:

Even if a property or asset is bought at a price below its market value, the difference may be taxable.

Are All Gifts Taxable?

Not all gifts attract tax. India does not have a separate gift tax since the Gift Tax Act, 1958 was abolished in 1998. But many gifts may be taxed under “Income from Other Sources” if they exceed certain limits or come from non-relatives.

Key Exemptions

1. Gifts up to ₹50,000 in a financial year: Any gift below this threshold is fully exempt. If the total exceeds ₹50,000, the entire amount becomes taxable.
Example: If you receive ₹30,000 from one friend and ₹25,000 from another, the total ₹55,000 is taxable.
2. Gifts from relatives: Gifts from close family members are fully exempt, regardless of value. Relatives include:

• • Spouse
  • Parents, grandparents (lineal ascendants)
  • Children, grandchildren (lineal descendants)
  • Siblings and their spouses
  • Parents’ siblings and their spouses

3. Gifts on specific occasions: Gifts received on:

• • Marriage
  • Inheritance or under a will
  • In contemplation of the donor’s death

4. Gifts from certain institutions: These include:

• • Charitable or religious trusts registered under section 12AA
  • Universities, hospitals, or foundations under section 10(23C)
  • Local authorities like Panchayats, Municipalities, or Cantonment Boards

5. Property received at nominal value: If a property is received below market/stamp duty value, the difference may be taxable.

So, who is exempt from gift tax in India and under what circumstances? Let’s summarise:

Tip: For taxable gifts, always maintain gift deeds, valuation reports, and bank transfer proofs to avoid any issues with the Income Tax Department.

How Is Gift Tax Calculated?

The taxable value of a gift depends on its type. Here's a simplified breakdown:

Declaring Tax on Gifts in India

If a gift is taxable:

• Include it under “Income from Other Sources” while filing your ITR.
• Compute tax as per your income tax slab.
• Maintain proper documentation, like gift deeds or bank transfers to substantiate the source of the gift if the tax department asks.
  
  

Tax on Gifts from Friends vs. Relatives

• Friends: Taxable if total gifts exceed ₹50,000.
• Relatives: Always exempt, irrespective of the amount.

Note: Income generated from a gift (like interest from a gifted sum) may be clubbed with the donor’s income in some cases.

Tax on Gifts in Marriage

• Any gifts received on the occasion of marriage are fully tax-exempt. It can be in cash/ property/ jewellery.
• Gifts on birthdays, anniversaries, or other occasions are taxable if they exceed ₹50,000.

Gift Tax Calculator India

To estimate how much tax you may need to pay:

1. Add up the total value of gifts received in the financial year.
2. Subtract exempt gifts.
3. Compute the taxable value as per type (cash, property, movable assets).
4. Apply your income tax slab to the taxable gift amount.

This gives a clear estimate of your gift tax liability. To ease your tasks, you can use a gift tax calculator India online. 

Summing Up

Gifts up to ₹50,000 per year are always exempt. Additionally, gifts from relatives or on marriage are also fully exempt. Taxable gifts are included under Income from Other Sources and taxed per your slab.

All in all, it is always good to maintain documentation of gift deeds, bank transfers, or valuation reports. This practice helps avoid scrutiny.

By understanding tax on gifts in India, you can gift smartly, save tax, and ensure compliance with the law.