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Blog » Money Management » All You Need to Know About Tax on Gifts in India
All You Need to Know About Tax on Gifts in India
Money Management

Giving and receiving gifts is an integral part of India’s cultural heritage. While in most cases, the value of such presents is nominal, but in some cases, the value of gifts such as property, jewelry, works of art, etc., can be substantial. To provide clear guidelines regarding which presents are taxable and the rate at which gift tax would be applicable, the Gift Tax Act was initially introduced in 1958. However, this act was later repealed in 1998.
After the Gift Tax Act, 1958 was repealed, all presents, irrespective of their value, were tax-free till the reintroduction of new rules for gift taxation in 2004 as part of the Income Tax Act. These provisions for the taxation of presents were further amended in 2010. As a result of multiple changes to tax rules governing presents, many of us are confused regarding the tax implication of the gifts we receive.
In this blog, we will discuss various rules and regulations regarding how gifts are taxed in India.
What is a Gift as per the Income Tax Act?
Under the definition provided by the Income Tax Act, a “gift” can be in the form of money and movable/immovable property that an individual receives from another individual or organization without making a payment. In legal terms, the person or organization providing the gift is termed the donor while the gift receiver is known as donee.
By this definition, examples of presents that are taxable in India include:
Money received by cash, draft, cheque, bank transfer, etc.
Immovable property such as land, building, residential/commercial property
Movable property such as jewelry, shares, bonds, paintings, sculptures, etc.
When are Gifts Exempt from Gift Tax?
Under current tax laws, not all gifts received in India are subject to tax. However, the Income Tax Act, 1962 includes key provisions which allow you to receive various tax-exempt gifts.
For instance, if you receive gifts or cash of up to Rs. 50,000 in a financial year, you do not have to pay any gift tax on it.
Similarly, if you receive presents from your parents, spouse, siblings, or other close relatives such as your in-laws, there is no tax liability. Again, this exemption from gift taxation is applicable no matter what their value is.
In India, it is not uncommon to give expensive presents such as jewelry and even property on the occasion of marriage. However, under current rules, you do not have to pay any tax on gifts received when you get married, irrespective of their value.
If you receive money or property as an inheritance or through a will, that is legally considered a gift because you do not make any payment to receive it. In this case, too, no gift taxation is applicable.
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