Gift Tax in India

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Hiral Vakil

Exempt Income
Gift Income
Last updated on February 12th, 2024

People often believe that if you receive any gifts from friends, family, or relatives on a birthday, anniversary or any other occasion is tax-free. However, the Govt. of India in the year 2004 reintroduced the Gift tax provisions under the Income Tax Act to impose a tax on receiving gifts. So, as per the Act if you receive any gifts of a value of more than INR 50,000 during the year then the gift is taxed as income in the hands of the person who receives the gift.

What is a Gift as per the Income Tax Act?

Gift as per the Income Tax Act means property (both movable and immovable) and money (cash, cheque, draft, etc) received without consideration or against inadequate consideration. Let’s understand what movable and immovable property include on which income tax provisions apply:

When are Gifts taxable?

When Gifts received are exempt from tax?

Under the following situations, gifts received are not taxable in the hands of the recipient irrespective of monetary value:


Here is the summary of all the scenarios for better understanding:

Gift Consideration Amount taxable
Money (cash, cheque, draft) Nil If money > 50,000; whole amount taxable
Immovable property Nil If the Stamp duty value is> 50,000; the Stamp duty value would be taxable
Immovable property (as defined above) Received which is less than stamp duty value by an amount exceeding Rs 50,000 [Stamp duty value – consideration] would be taxable
Agricultural land in rural areas Nil/received Nil
Movable property (as defined above) Nil Fair market value > 50,000; Fair market value would be taxable
Movable property (as defined above) Received which is less than Fair market value by an amount exceeding Rs 50,000 Fair market value – consideration > 50,000, Fair market value would be taxable
Property/money on the occasion of marriage Nil/received Completely exempt irrespective of value
Any gifts not included in definition above Nil/received Completely exempt irrespective of value

Provision Relating to Stamp Duty for Gift Tax

In order to calculate gift tax for immovable property, stamp duty value must be considered. There is a possibility that the stamp duty can be higher for reasons like the time gap between the agreement fixing the consideration and the date of registration. Hence, for calculating gift tax stamp duty value as on the date of agreement fixing the consideration must be taken into consideration if the following conditions are satisfied:

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Are monetary gifts received from friends liable to tax?

Gifts received from relatives are not charged to tax.
Friend is not a relative as defined in the list and hence, gifts received from friends will be charged to tax (if other criteria of taxing gift are satisfied).​

Is gift in cash taxable?

Gift of money: The aggregate value of cash gifts received without consideration during a financial year would be taxable as Income from Other Sources in the hands of the recipient. However, if the aggregate value of such gifts is less than Rs 50,000, then it would be exempt from tax

Are gifts received by a minor taxable?

If both parents are earning taxable income, gifts received by a minor will be combined with income and attributed to the parent with the highest earnings.

Got Questions? Ask Away!

  1. Hello @Rakesh_Sharma

    Inheritance will be considered as gift and gift received from relatives are not charged to tax.

    So If you give away your inheritance (received from father) to daughter (a lineal descendant ) it will be exempt from tax but your daughter’s children are not lineal descendant so that will be taxable in their hands.

    Hope this helps!

  2. Hey @Anup_K_Nair

    Sorry to hear about you father.

    Your mother will NOT be liable to pay any tax on the inherited assets, as she is the legal heir (assumed). The Income Tax Act, 1961 excludes inherited assets from taxation.

    However, any subsequent income arising from these assets (dividend, interest, etc.) will be added to your mother’s income and she’ll be liable to pay tax on such income.

    PS: I hope your father had added your mother as a nominee in his accounts, else you’ll have to do a lot of paperwork.

    Hope this helps :grinning: & feel free to reach out for any further queries.

  3. Hey @sarvesh.k91

    Income earned after the death of the individual will need to be disclosed in the personal income tax return of the legal heir. The legal heir should include this income inherited from the deceased in his own income while filing his own income tax return.

    The liability of the legal heir shall be limited to the value of the assets inherited.

    Feel free to reach out in case of further queries!

  4. I received a property in inheritance, do I need to pay tax on it?

  5. Hello @raopreetham,

    This is a capital transaction and hence shall be taxed under the head “Income from Capital Gains”. The amount that you have received (around INR 4 Lakhs) shall be the Sales consideration, you can claim the acquisition cost based on your share in the land, if acquisition cost is not ascertainable you can claim the fair value of that share of land as on 01/04/2001.

    Hope this helps!

  6. Hello @raopreetham,

    When you inherited the ancestral property, it is not taxed at that time. As you have sold the property and earned some gain on transfer of capital asset, that gain will be taxable.

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