Gift Tax

N D Savla & Associates

A lot of people still think there’s a separate “gift tax” in India.

There isn’t.

But that doesn’t mean gifts are always tax-free.

What is Gift Tax?

In India, gift tax as a separate tax no longer exists. It was abolished in 1998.

However, gifts are now taxed under the Income Tax Act in the hands of the recipient under the head “Income from Other Sources.”

In simple terms:
👉 Gifts can still be taxable — just not under a separate “gift tax” law

When are Gifts Taxable?

Gifts become taxable when:

• They are received from non-relatives, and
• The total value exceeds ₹50,000 in a financial year

Once the threshold is crossed, the entire amount becomes taxable, not just the excess.

Gifts That Are Tax-Free

Gifts are fully exempt in the following cases:

• Received from specified relatives
• Received on marriage
• Received through a will or inheritance
• Received in contemplation of death
• Certain gifts from local authorities or trusts

👉 The relationship between giver and receiver is critical

Who is Considered a Relative?

As per income tax rules, relatives include:

• Spouse
• Parents and siblings
• Lineal ascendants and descendants (like grandparents, children)
• Certain in-laws

Gifts from these relatives are generally not taxable.

Types of Gifts Covered

Tax rules apply to:

• Cash gifts
• Movable assets (shares, jewellery, etc.)
• Immovable property (land, house)

Each category has specific valuation rules.

Tax Treatment of Property Gifts

• If property is received below stamp duty value, the difference may be taxable
• Stamp duty value is considered for taxation, not just transaction value

This is where most people underestimate tax exposure.

Why Gift Tax Rules Matter

• Prevents misuse of gifts for tax avoidance
• Impacts high-value transfers
• Affects property transactions
• Important for family wealth planning

Ignoring this often leads to notices later.

Common Mistakes to Avoid

• Assuming all gifts are tax-free
• Ignoring ₹50,000 threshold
• Not documenting high-value gifts
• Misunderstanding “relative” definition
• Overlooking property valuation rules

Who Should Be Careful

• Individuals receiving large monetary gifts
• Property buyers receiving discounted transfers
• Families doing wealth transfers
• High net-worth individuals

How We Can Help

At N D Savla & Associates, we help you:

• Evaluate taxability of gifts
• Structure transfers efficiently
• Ensure proper documentation
• Avoid unnecessary tax exposure
• Handle compliance and reporting

Get Professional Support

Gift transactions look simple, but tax rules around them aren’t.

If you’re receiving or planning a high-value gift, it’s worth getting clarity upfront.

Connect with N D Savla & Associates for practical guidance.