If  an individual/Huf receives from any person or persons any gift, exceeding Rs. 50000 in any previous year, as per income tax laws, the aggregate amount shall be taxable as Income From Other Sources in the hands of individual or HUF under section 56. The gift can be the following:

1.Gift Any sum of money (without Consideration) – 

if the aggregate amount of money received in any previous year is more than Rs 50,000, the entire amount received shall be taxable as income from other source

2. Gift of Any immovable property

Without Consideration: the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property shall be taxable as income from other source. Or,

 For a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be taxable as income from other source.

However wef A.y 2019-20, the above provision has been amended which is as follows:

For a consideration , the stamp duty value of which exceeds  105 percent of the consideration and the difference between stamp duty and consideration exceeds Rs 50000, than the difference amount between stamp duty and consideration  shall be taxable as income from other source.

It should be noted that, that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of the agreement may be taken for the purposes provided that the the amount of consideration for the said immovable property , or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property.

3. Any property (other than immovable property):

without consideration, the aggregate fair market value of which exceeds fifty thousand rupees, the whole of the aggregate fair market value of such property shall be taxable as income from other source. Or,

For a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees, the aggregate fair market value of such property as exceeds such consideration shall be taxable as income from other source.

Gifts received From Relatives

As per the Income tax act, the sum of money received from any of your relatives are fully exempt from tax. Here the “relatives” term defines by the Income Tax act as follows :

  • Spouse of the individual
  • Brother or sister of the individual
  • Brother or sister of the spouse of the individual
  • Brother or sister of either of the parents of the individual
  • Any lineal ascendant or descendant of the individual
  • Any lineal ascendant or descendant of the spouse of the individual
  • Spouse of the person referred to in clauses (ii) to (vi).
  • In case of a Hindu undivided family, any member thereof;

For example if you are receiving sum of money of Rs.100000 from your uncle (your mother’s brother), it is fully exempt from the Tax. Whenever you get the gifts please apply the relations in the above list to ascertain whether you are liable to pay any tax for the received gift.

Gifts (sum of money) received From Non-Relatives

Here non-relatives means anyone who doesn’t come under the above mentioned relation for you. In this case you are tax exempt up to maximum of Rs.50000 for a financial year. If you receive the sum of money worth more than Rs.50000, you are liable to pay the tax on the aggregate amount (that is, total amount received). This rule applies when the gift is a sum of money, whether in cash, by way of cheque, bank draft or any articles which is value more than the Rs.50000.

For example when you are receiving a gift of Rs.1,00,000 (cheque) for the best performing in your company (not a bonus), Rs.1,00,000 shall be liable to  tax.

My mother gifted me Rs. X amount. Is this taxable?

The simple answer is “NO”. Any gift in the form of articles, shares or cash are not taxable on your hand. If you want to understand the gift related income tax laws, Under section 56 of the Income-tax Act, any money received without consideration which is exceeding Rs. 50000 is taxable on your hand. But, there is exception on certain situations.

The money is received from a relative, which includes, among others, any lineal ascendant or descendant of the individual is fully tax exempt on your hand. So, it is very clear that money received from your mother or father would be not taxable on your hand.

Another important point, if you want to claim the tax exemption on the gifts, please make sure that you have the gift deed format executed and who is gifting signed on the papers. Without that the gift laws are not valid for claiming the exemptions. You may consult a lawyer for the documentation with respect to the gift transaction.

Marriage Gifts

One very happy feature of the provision of taxation of gifts is that any gift received from any person on the occasion of the marriage of the gift’s recipient would not be liable to income tax. There is no monetary limit attached to this exemption. Note that, if you receive any gifts at the time of engagement or the marriage anniversary if liable to pay the tax.

Special Tax Exempt gifts

The following list of gifts are fully exempted from Tax whether the it is received as Cash, or any other form of the material doesn’t affect the exemption.

  1. Gift received under a Will or by way of inheritance
  2. Gift in contemplation of death of the donor; Gift from any local authority
  3. Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C)
  4. Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA/12A
  5. on the occasion of the marriage of the individual
  6. by way of transaction not regarded as transfer underof section 47.
  7. from an individual by a trust created or established solely for the benefit of relative of the individual.

I hope this post would have given you good idea on the gift from your close relatives. If you receive any favor from your mother or father for very huge amount, it is advised to have the gift deeds to avoid any future income tax problems. If you have any questions on the gift taxes, please post it in the comments section or send a mail to xavierindia@yahoo.co.in

Regards

T.Xavier M.Com,PGIT, (ICWAI- Final)

(Republished With Amendments)

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72 responses to “Taxability of Gifts received from Relatives & Non Relatives”

  1. Shammy Guleria says:

    I had transfer Rs. 2.5 lac in my wife’s account in FY 2018-19. I just want to know that this amount is taxable or not, or any tax ability on this amount. My wife is working but her income not more than 1.5 lac.

  2. Manoj Bhatnagar says:

    My mother purchased house in Rs. 112500 in F.Y.year 1998 & sold out in Rs. 7.0 Lakh in Dec. 2015.She gifted me entire amount with gift deed.
    I shown in my return for F.Y. 15-16 as my capital gain after indexation as Rs.526763/- and deposited in my capital gain account. Now please guide me, can I revise my IT return to show entire amount as gift from my mother and avail tax exemption or should I pay capital gain Tax.

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