Gifts and tax

Part of Tax on investments. 5 min read. Free lesson with a short video, quiz and practice.

India has no separate gift tax. Instead, some gifts count as income for the person who receives them. Whether a gift is taxed depends on who gives it and how much it is worth.

Gifts that are never taxed

• Gifts of any amount from relatives: your spouse, parents, grandparents, children, grandchildren, brothers and sisters, your spouse's brothers, sisters and parents, your parents' brothers and sisters, and the spouses of these relatives.
• Gifts received on your marriage, from anyone.
• Money or property received through inheritance or a will.

Gifts that can be taxed

Gifts from people who are not relatives (friends, colleagues, cousins) are taxable if their total value in a tax year is more than ₹50,000. The rule covers money, property, shares, jewellery, art and crypto.

Watch the trap: once the total crosses ₹50,000, the whole amount is taxed, not just the part above ₹50,000. It is added to your income and taxed at your slab rate.

Example: on your birthday, one friend gives you ₹30,000 and another gives ₹40,000. Total ₹70,000 is above ₹50,000, so all ₹70,000 is taxable. But if your brother gives you ₹5,00,000, it is fully tax-free.

Gifts from your employer

Non-cash gifts such as vouchers from an employer are tax-free up to a limit, which the new Income-tax Rules raised to ₹15,000 a year from 1 April 2026. Cash gifts from an employer are taxed as salary.

After the gift: clubbing

The giver pays no tax on giving. But if you gift money to your spouse or to a minor child, the income earned on it (such as FD interest) is usually added to your income, not theirs. This is called clubbing, and it stops people shifting income to save tax.

Selling a gifted asset

When you sell shares, gold or property that you received as a gift, the original owner's purchase cost and holding period are used to work out your capital gain.

Keep records

For large gifts, especially between relatives, keep a simple gift deed or note and a record of the bank transfer. It helps if the tax department asks where the money came from.