Tax on Gifts under Income-tax Act, 2025: Which Gifts Are Taxable and Which Are Not?

Many people believe that every gift they receive is taxable. In reality, not all gifts are taxable. Whether tax applies depends on who gives you the gift and how much the gift is worth. From 1 April 2026, the Income-tax Act, 2025 has replaced the Income-tax Act, 1961, so here is a quick and simple guide as per the new law.

What Has Changed under the New Act?

• Taxation of gifts is now covered under Section 92(2)(m) of the Income-tax Act, 2025 (Income from Other Sources). Earlier, it was covered under Section 56(2)(x) of the Income-tax Act, 1961.
• The new Act uses the term "Tax Year" instead of "Previous Year" and "Assessment Year". For gifts received between 1 April 2026 and 31 March 2027, the Tax Year is 2026-27.
• The basic rules, the list of exempt relatives and the ₹50,000 limit remain the same.
• Gifts received up to 31 March 2026 continue to be governed by the old Act, 1961.

Gift Tax Rules at a Glance

1. Gifts from Relatives

Gifts received from specified relatives such as your spouse, parents, brothers and sisters, paternal and maternal uncles and aunts, and parents-in-law are fully exempt from tax. There is no upper limit on the amount.

2. Gifts from Friends and Non-Relatives

If you receive gifts from friends or any person who is not a relative, and the total value exceeds ₹50,000 in a Tax Year, the entire amount is taxable as Income from Other Sources in your hands. If the total is ₹50,000 or less, no tax is payable.

3. Gifts Received on Marriage

Gifts received by a person on the occasion of his or her own marriage are not taxable, irrespective of who gives them and the amount. This exemption does not cover wedding anniversaries or the marriage of other persons.

Other Situations Where a Gift Is Not Taxable

• Gifts received under a will or by way of inheritance.
• Gifts received in contemplation of death of the donor.
• Gifts received from certain registered non-profit organisations, subject to conditions.

Important Points to Remember

• Taxability of gifts is governed by Section 92(2)(m) of the Income-tax Act, 2025 (earlier Section 56(2)(x) of the Income-tax Act, 1961).
• The ₹50,000 limit applies to the aggregate of gifts received in a Tax Year from non-relatives.
• Gifts of immovable property (land or building) and certain movable property (such as shares, jewellery and artistic work) also fall under these rules.
• Even if a gift is tax-free, income earned from the gifted asset (such as interest or rent) may be taxed in the hands of the giver under the clubbing provisions.
• Always keep proof such as a gift deed, bank transfer record and relationship details for future reference.

Conclusion

Under the Income-tax Act, 2025, gifts from close relatives and gifts received on your own marriage remain tax-free, but gifts from friends and other non-relatives become taxable once they cross ₹50,000 in a Tax Year. Plan your gifts carefully and maintain proper documentation to avoid notices later.

Note: Only a few common cases are listed here. Taxability of gifts is covered under Section 92 of the Income-tax Act, 2025. This blog is for general information and is not professional advice. Please consult a Chartered Accountant for your specific case.