Slide
MEET by Quicko

Tax on Gift: Rules and Exemptions As per Income Tax Act in India

author portrait

Hiral Vakil

Exempt Income
Gift Income
IFOS
Last updated on September 13th, 2021

What is Gift as per Income tax Act?

Gift as per 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 non-taxable in hands of recipient irrespective of monetary value:

Relative*

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 Stamp duty value > 50,000; 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 area 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 time gap between the agreement fixing the consideration and 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:

Earned Income from Other Sources
Let our Experts help you file your ITR
[Rated 4.8 stars by customers like you]
Earned Income from Other Sources
Let our Experts help you file your ITR
[Rated 4.8 stars by customers like you]

FAQs

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, gift received from friends will be charged to tax (if other criteria of taxing gift are satisfied).​

Is gift in cash taxable?

Gift of money: 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

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?

Continue the conversation on TaxQ&A

4 more replies

Participants