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Income Tax (IT) Implications On Gift Received In India

Gift is something we all like to get from our loved once but are we aware about the tax implications on the same. Under Income Tax Act 1961, there are many rules on receiving gift  based on the nature of the gift and from whom the person has received the gift. As per income tax act, gift received in the form of cash, immovable property, shares & securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art exceeding Rs. 50,000 from 01.04.2006 (Rs. 25,000 from 1.9.2004 to 31.03.2006), from any person is chargeable to tax under the head “Other Sources”, subject to following exceptions:

  • Gift received from certain relatives (as defined in the section),
  • Gift received on occasion of marriage of the individual,
  • Gift received under a will or inheritance,
  • Gift received due to the death of the payer.

Lets have a closer look on the tax implications on receiving gift from your relatives, non relatives and others.

Gift Tax

Gifts Received From Relatives

As per the Income tax act, the term “relatives” is described in detail. As gift received in the form of cash, cheque or good from your relative is fully exempt from tax. So if you receive a gift money from any of your relatives listed below, you are not liable to pay any tax on the same.

  • Father or Mother of the individual
  • Brother (Bhai) or sister (Behin) of the individual
  • Son (Beta) or daughter (Beti) of the individual
  • Grand son (pota) or Grand daughter (poti) of the individual
  • Spouse of the individual i.e husband (pati) or wife (patni) of the individual
  • Sister’s Husband (Jija) or Brother’s Wife (Bhabhi) of the individual
  • Brother (sala) or sister (sali) of the spouse (Wife) of the individual
  • Brother (dewar) or sister (nanad) of the spouse (Husband) of the individual
  • Brother (Mama) or sister (Mausi) of the Mother of the individual
  • Mother’s Sister Husband (Mausa) of the individual
  • Wife’s brother’s wife of the individual
  • Father’s Brother (Chaha or Tau) of the individual
  • Father’s Brother’s Wife (Chachi or Tai) of the individual
  • Father’s Sister’s Husband (Fufa) of the individual
  • Father’s Sister (Bua) of the individual
  • Grand Father (Dada) or Grand Mother (Dadi) of the individual
  • Great Grand Father (Pardada) or Great Grand Mother (Pardadi) of the individual
  • Daughter’s Husband (Jawai) of the individual
  • Son’s Wife (Bahu) of the individual
  • Wife’s Father (Sasur) or Wife’s Mother (Saas) of the individual
  • Husband’s Father (Sasur) or Husband’s Mother (Saas) of the individual
  • Wife’s Grand Father (Dada Sasur) of the individual
  • Husband’s Grand Mother (Dadi Saas) of the individual
  • Husband’s Grand Father (Dada Sasur) of the individual
  • Wife’s Grand Mother (Dadi Saas) of the individual
  • Wife’s Great Grand Father (Bade Dada Sasur) of the individual
  • Husband’s Great Grand Mother (Badi Dadi Saas) of the individual
  • Husband’s Great Grand Father (Bade Dada Sasur) of the individual
  • Wife’s Great Grand Mother (Badi Dadi Saas) of the individual
  • Brother’s Wife (Bhabhi) of the individual
  • Mother’s Brother’s Wife (Mami) of the individual
  • Husband’s Brother’s Wife (Devrani or Jithani) of the individual

For Example, if you get a gift money of Rs. 50,000 from your Uncle ( Your Father’s brother), it is fully exempt from the tax as your uncle comes under your relatives as per the income tax stated list. So from now if you receive any money from any of your relative ( As per Income tax law) then wont get any tax burden for the amount of gift money received.

Note : There is no tax on money received from Relative, whether they live in India or not (NRI). All Gift from relatives are exempted.

Gifts Received From Non-Relatives

As per income tax law who so ever doesn’t come under the above mentioned relation are called as non-relatives for you. Even in this case you get tax exemption on the gift received but with an exception. If you receive gift in the form of cash, cheque or bank draft then there is limit of Rs 50,000. Which means if you receive any gift in the form of cash, cheque or bank draft then you are exempt upto a limit of Rs 50,000, you will be liable to pay  gift tax only if gift amount exceeds this limit. Which means any amount above Rs. 50,000 will pull gift tax liability on you. But if the received gift is not in monetary form then you are fully exempt from the tax.

For example, if you receive a car in gift from one of your friend then it is not coming under the tax liability i.e gift tax. But, if you receive a gift of Rs.90,000 (cheque) from a friend then you are liable to pay gift tax on Rs 40,000 ( 90,000 – 50,000).

Marriage Gifts

One of the special gift from income tax, any gift received on marriage is fully exempt from tax. There is no condition on monetary limit attached to this exemption.

Special Tax Exempt gifts

The following list of gifts are fully exempted from Tax whether the it is received as Cash, or any other form of the material doesn’t affect the exemption.

  • Gift received under a Will or by way of inheritance
  • Gift in contemplation of death of the donor;Gift from any local authority
  • Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C)
  • Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.

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About the Author: Praveen Unnikrishnan

19 Comments

  1. I want to know the tax implication on gifts received from
    1. The children of individual’s brother and sister.(Bhatija/Bhatiji and Bhanja/Bhanji)
    2. The children of individual’s spouse brother and sisters. (Bhatija/Bhatiji and Bhanja/Bhanji) of spouse.
    Whether the above mentioned relatives are in the category of relatives or non relatives.
    Thanks

      1. Thanks for the reply
        But why. Aren’t they relative. Not only relative but close relative.
        Of the same family.
        Isn’t it illogical.
        Can you please give examples about lineal ascendant and descendant.

          1. Thanks
            What I got it is direct lineage but not branch for lineal ascendant.
            Like father but not uncles.
            Grand father but not brothers of grandfather.
            But for lineal descendant, it is true.
            As son’s brother is also a son, and grandson’s brother is a grandson as well.

  2. The Chart that you have drawn explaining the people from whom gift is exempted from tax is highly useful.

    Thanks and keep up the good work 🙂

    1. Treatment of income earned from the gift by relative is taxable to the spouse, kindly let me know the amount received as interest on FD of the gifted amount in the subsequent FYs

  3. hi

    your list doesn’t talk about nana ( mothers father) and nani ( mothers Mother).. are they not relative ?

  4. Are there any restrictions on FREQUENCY per year or Amount per transfer or Amount per year of gifts from me (ex-Indian, now American) to my Father’s sister in India?
    I heard that only one transfer per year is permitted..is this true?

  5. If sons wife (Bahu) received a gift more than Rs12 lac in one financial year by cheque from her father in law ,is this amount is leviable to Income Tax/Gift tax when such amount is credited to her Bank Account and how the declaration will be made by father in law to son’s Bahu and what is the value such instrument i.e.non judicial stamp paper.
    Please let me know at the earliest.
    Thanking you,
    With regards,
    Buddha deb Das

  6. CAN MY WIFE TAKE CHQ OF RS. 100000 ON HER BIRTHDAY FROM MY BROTHER’S WIFE ?

    IS IT EXEMPTED GIFT AS PER INCOME TAX ?? OR IS SHE NEED TO PAY TAX ON THAT??

    WOULD APPRECIATE YOUR QUICK RESPONSE.

    THANKS IN ADVANCE.

  7. SIR , MY FATHER IS GOING TO GIFT OF RS 2500000 TO MY WIFE. IS ANY REASON REQUIRED FOR GIFTING MONEY TO MY WIFE…?

  8. You haven’t mentioned that if I receive a gift money of more than 50000 from my relative under the act, I will not be liable for tax.

    You gave the example of my uncle . If I receive 50000 from my father’s brother, it will not be taxable . But you didn’t mentioned that it will not be taxable even of it is more than 50000, because it’s coming from relative

  9. If brother makes a cash deposit into his married sister’s savings account, then will this amount draw tax liability?

  10. IN INDIAN SOCIAL SYSTEM, IN JOINT FAMILIES IT IS VERY COMMEN THAT FIVE SIX GENERATIONS LIVE TOGETHER OR AT LEAST CARE EACH OTHER . UNDER THESE SITUATION UNCLE’S SON’S GIFT GET TAXABLE . SIMILAR

    AT LEAST FEW SUCH RELATIONS UPTO 3-4 GENERATIONS MUST BE KEPT OUT OF TAXATION .

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