Income Tax on Gift in India – Rules and tips to save tax

What are the rules of Income Tax on Gift in India and how we can use exemptions and save tax on it? We often believe that if we gift money to a spouse, kids, family or friends then we can save tax. But the reality is something different.

Hence, try to understand the Income Tax on Gift in India.

What is the meaning of Gift?

A receipt of sum of money or property (immovable property like land or building or both, shares and securities, jewellery, archaeological collection, drawings, paintings, sculptures or any work of art or bullion) without consideration or without inadequate consideration is called as Gift.

Here two parties are involved and they are as below.

# Donor- A person who is giving the gift.

# Donee- A person who is receiving the gift.

What types of assets you can gift?

Cash or Money

The gift can be in the form of cash or money.

Movable Assets / Property

Shares and securities, jewellery, archaeological collection, drawings, paintings, sculptures or any work of art or bullion Gold bars, Silver bars etc.,

Immovable Assets/Property

Land or building or both (does not include agricultural land in the rural area).

Other than these

If you gift any other assets other than the assets listed above, then they are not considered as gift for income tax purpose.

What are the Income Tax Benefits for the donor by gifting?

Many individuals feel that by donating their money or property, they can save tax. This I feel the biggest myth. Just keep it in mind that there will no tax benefits by donating the money or property. If that was the case, then say Mr.X earning is Rs.10 lakh a year. He may donate Rs.2.5 lakh to his wife and Rs.5 lakh between his two kids to show his tax liability as ZERO.

What are the Income Tax Benefits for the donee by receiving the gift?

There are many scenarios of receiving the money or property from the donor. Let us discuss the same in detail.

Income Tax on Gift in India -Scenerios

# Gift received up to Rs.50,000 in a year is not taxable

If aggregate amount of sum of money or property (immovable property like land or building or both, shares and securities, jewellery, archaeological collection, drawings, paintings, sculptures or any work of art or bullion) received by an individual/HUF without any consideration from one or more persons during a financial year not exceeds Rs.50,000, then it is not taxable income.

Let us say Mr. A received some gift from his from Mr.X and value is Rs.25,000 and another gift from Mr.Y valuing Rs.20,000. Then his total gift received is Rs.45,000 (which is less than Rs.50,000). Hence, it is not taxable to Mr.A.

However, if Mr.A received another gift from one more friend Mr.Z within a same of valuing Rs.10,000, then his total gift value within that financial year is Rs.55,000. This is more than the limit of Rs.50,000.

In such scenario, the whole Rs.55,000 is taxable income to Mr.A (but not the only exceeding amount of Rs.5,000).

# Gift received from relatives is not taxable

Gift of money or property received from a relative is not taxable income for the receiver or donee. For this purpose, the meaning of relative is as below. The list is big one, but I will give a complete list.

  • Spouse
  • Brother
  • Brother’s Wife
  • Sister
  • Sister’s Husband
  • Spouse’s Brother
  • Spouse’s Brother’s wife
  • Spouse’s Sister
  • Spouse’s Sister’s husband
  • Spouse’s Father
  • Spouse’s Mother
  • Spouse’s Grand Father
  • Spouse’s Grand Mother
  • Spouse’s Great Grand Father
  • Spouse’s Great Grand Mother
  • Mother
  • Mother’s Brother
  • Mother’s Brother’s Wife
  • Mother’s Sister
  • Mother’s Sister’s Husband
  • Father
  • Father’s Brother
  • Father’s Brother’s Wife
  • Father’s Sister
  • Father’s Sister’s Husband
  • Grand Father
  • Grand Mother
  • Great Grand Father
  • Great Grand Mother
  • Son
  • Son’s Wife
  • Daughter
  • Daughter’s Husband
  • Grand Son
  • Grand Son’s Wife
  • Grand Daughter
  • Grand Daughter’s Husband

You notice that there is no limit for the gift value. Therefore, whatever the value of the gift you receive from your relatives is not taxable income.

However, let us Mr.X donate Rs.1 lakh to his wife Mrs.X. Then for Mrs.X, the amount is not taxable. But what if she invests this Rs.1 lakh and earns Rs.10,000 on this in a year? Is it the income of Mr.X or Mrs.X? In such situation clubbing of the income provisions will come into the picture.

Let me try to explain the same from below image.

Gift and clubbing of Income

Hope you now have clarity about the clubbing of income rules when you receive the money from the relatives.

# Gift received during wedding is not taxable

Gift received by an individual from relative or non-relative during and individual’s wedding is not taxable. Here, an individual means a specific individual, whose marriage is solemnised.

Note that there is no limit of value. Hence, it may be Rs.50,000 or any amount, it is not taxable. Also, this gift may be either from relative or non-relative. The whole such gift is not taxable to you.

# Money received by the way of WILL/inheritance

If you receive the money or property by the way of WILL or inheritance, then it is also not considered for taxable income. Hence, if you receive the money or property worth of Rs.1 Cr from WILL or inheritance, then it is not taxable income for you.

# Movable property as a Gift

There are two conditions here. One is with consideration (which is less than the fair market value) and another is without consideration. Consideration means you will be paying some value for getting that gift. Movable property means shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work or art and bullion.

  1. Without consideration-If the aggregate fair market value of movable property received without consideration and value of such received is less than Rs.50,000 means it is not taxable income. If it is more than Rs.50,000 then the fair market value of the property will be chargeable to tax.
  2. With consideration (which is less than the fair market value)-If movable property received for a consideration which is less than the fair market value of the property and amount exceeding is Rs.50,000, then the difference between fair market value and the consideration is chargeable to tax.

Therefore, not that if you received a movable property like TV or Car as a gift, then it is not considered as taxable income for you.

# Immovable property as a Gift

Here, again there are two conditions. One is with consideration (less than the stamp duty) and another is without consideration. Immovable property means land or building or both (does not include agricultural land in rural area).

  1. Without consideration- If any immovable property is received and the stamp duty value of which is less than Rs.50,000, then it is not taxable income. However, if it is more than Rs.50,000, then stamp duty value will be chargeable to tax.
  2. With consideration- If any immovable property is received for a consideration which is less than the stamp duty value of the property and amount is exceeding Rs.50,000, then the difference between stamp duty value and consideration is chargeable to tax.

Apart from above examples, there are few other types of gifts which are fully exempt from tax and they are as below.

  • Gift received under a will or by way of inheritance.
  • Gift in contemplation of death of the donor.
  • Gift from any local authority.
  • 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).
  • Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.

How to show the Gift income while filing IT Return?

You no need to show the gifts which are less than Rs.50,000, gifts received by relatives or gifts during marriage under the head of “Income from Other Sources”. Because it does not fall under the definition of Income chargeable to Tax.

However, if you received the property through registered property deed or your PAN is quoted during transaction, then you have to show the value of the gift received as EXEMPT INCOME while filing ITR.

Documentation of Gift

It is always a best practice to document the gift transactions to avoid the future ambiguity of taxation. If you gifted by cheque or cash or any other movable assets, then registration or stamped the gift is not required. In a plain paper, you can write it and keep it for your reference.

For the gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor. Gift of immovable property which is not registered is not valid as per law and cannot pass any title to the receiver.

Tips to save Income Tax on Gift in India

Now let us discuss on the ways to save Income Tax on Gifts in India.

# Invest in the tax-exempt instrument in the name of spouse

If you invest in any tax-exempt instruments in the name of spouse , then the profit will be clubbed in your name as tax-free income. Again any investment done from such tax-free income is the considered under the head of donee.

Let us say Mr.X donated Rs.20 lakh to his wife Mrs.X. She invested this money in tax-free bonds or equity mutual funds. Income earned from equity mutual funds after a year is tax-free. Let us say after 5 years, the value of the investment is Rs.30 lakh. This Rs.10 lakh profit will be tax-free income in the hand of Mr.X. However, any further earnings of this Rs.10 lakh will be treated as income of Mrs.X.

The same rule can applicable to tax-free bonds or the products like ELSS. In ELSS you have to invest in your spouse name. Then the rules of equity mutual fund as explained above will be applicable to ELSS funds also.

# Invest in the name of parents

Just use the clubbing of income rules, where parents income will not be treated as income of your’s. Hence, you can gift to your parents. Any earning from such investment is directly calculated under their head, but not considered for you.

For example, Mr.X gifted Rs.20 lakh to his parents Mr.A and Mrs.A. Income generated from Rs.20 lakh will be considered as the income of Mr.A and Mrs.A, but not the income of Mr.X. Hence, if your parents’ income tax liability is less than your’s then you can easily save some tax by donating to parents.

# Invest in the name of major kids

Clubbing of income will be applicable to minor kids but not to major (kids who completed 18 years of age) kids. Hence, by gifting to major kids, you can avail the same tax benefits as I explained about donating to parents.

But do remember that gifting to your parents or major kids will be hepful to you when they don’t have taxable income or their tax liability is less than your. Otherwise, it is just a headache to manage the tax part without any gain.

How the valuation of Gift is calculated?

# For all Immovable Property-Stamp duty value of the property.

# For Jewellery, archaeological collections, drawings, paintings, sculptures or any work of art-

  • If purchased from the registered dealer, then the invoice value of these properties will be considered as fair market value.
  • In all other cases, the assessee must obtain the report of registered valuer in respect of the price it would fetch if sold in the open market on the valuation date.

# For Quoted Shared and Securities-The transaction value as recorded in such stock exchange.

# For quoted shares and Securities but not received through recognized stock exchange-Lowest price of such shares and securities quoted on any recognized stock exchange in India on the valuation date.

Hope I covered all major points related to Income Tax on Gift in India.

109 Responses

  1. sir
    1) Father Gift Share to Major daughter & Dividend income generate from the gift stock is clubbling with Father income ?
    2) Husband Gift Share to spouse & Dividend income generate from the gift stock is clubbling with Husband income?
    3) Individual Gift Share to HUF Account & Dividend income generate from the gift stock is clubbling with Individual income ?
    Awaiting your reply

  2. I want to gift an immovable property to my aunt ( real chachi) but this would attract tax under ifos. Is there any way out for this ?

  3. Hello, I gifted some money to my sister and she invested in Mutual Funds and Fixed deposits. Would the interest earned on such investments be added in my income or hers?

  4. I am an NRI. I want to gift my uncle( My mother’s younger brother) some amount (Around 25 lakh rupees). He is having some serious financial problem in his business . If i do this as a gift deed (I will transfer from my NRI account to his savings account) is it taxable by IT (Whether my uncle need to pay income tax on this) . Or do i need to first transfer to my monther’s account and then she give to her brother . Please let me know the best way to help him without coming under the tax burden.

  5. Sir, say, wife has two goods carriages lorries. If wife transfers a lorry to her husband without consideration as gift. Later, husband uses that lorry for business purpose.If the business income arises from such lorry, will that business income be clubbed in the hands of wife. Can you explain this situation?

      1. Ok sir. Thank you for your reply.
        If wife transfers lorry to his husband without consideration, is there any tax consequence?

  6. Basu Sir,

    I am 48 yrs old , unmarried & looking after my parents…My elder brother gives me cheque on my birthday . rakshabandhan, bhaiduj. is there any limit to it? taxable?

    Pl create a page as to how to calculate total income, taxable income & income tax to pay… or if any already there, pl share the link.that will be of real help to novice like me who wants to file tax return & pay the dues rightly


  7. sir, if my total taxable income is 10lakh but i also send money 10,000 per month to my 25 year child (for education purpose) who has no income yet and studying only. Would my total taxable income be lesser than 10lakhs?

      1. Thank you sir for replying! Sir, if i give interest free loans(which is legal) to my 25 year child then would it decrease my taxable income?

  8. sumit- i have a flat of 25 lac. i want to gift my flat to my close friend through gift deed .what will be amount to be taxable.what percentage of stamp duty on this process.

      1. this transfer will be under gift deed or sale deed? to avoid transaction should i make will for him?.how can i give gift to my friend.

        1. Sumit-If there is a sale deed, then there is a consideration. If it is a gift deed, then there may not be any consideration. You can gift to anyone, but taxation will change based on to whom you are gifting.

  9. Hello sir,

    My father (87) wants to gift his flat to me & my brother ( both unmarried) .

    (1) what’s the process of gifting a house in coop society?
    What’s r tax implication?
    Is it better to be nominnee than to get gift?

    (2l does the will needs to be registered?

    Pl guide


      1. Sir,

        My father is making ALSO a will mentioning our names as nominee for flat…
        Will it be OK?

        Does the will needs to be registered ?

  10. Dear Basu

    To avoid clubbing rule, can I gift to my sister (She is married). And can she can gift to my wife?
    Or I can gift to my Mother and she gifts to my wife?

    The amount is big for me and would like to save tax on money if I can.

    Thank you

      1. I think I am doing one more reverse transaction, If my Sister is giving Gift to my Wife, won’t it be my wife’s ownership for tax if she invests it into FD/Savings account?

        Thank you

  11. My Aunt wants to gift cash to her nephews and nieces as she is 86 years old and would like to do it now and not after her death. The donees will be exempted form gift tax acc to the definition of relatives. What about my Aunt? Will she have to pay gift tax? Please clarify.

    Thanks in advance

  12. Hello, My parents have gifted me 5 lak rupees. Do i have to get a gift deed for the same? and please clarify whether it has to be on bond paper ot plane paper? And what are the consequences of not having a gift deed?

  13. Sir,
    I had gifted my father a cheque for Rs.25.00 lakh. He started an FD with the amount, making me as 2nd joint holder with my signature. But, the interest goes to his personal SB account monthly. Will it attract any tax liability to me. ?.

  14. Hi Basu,

    There is some confusion in this article.

    As per the “# Invest in the name of parents section”, you have mentioned clubbing rules apply.
    Then in the example you mentioned “Income generated from Rs.20 lakh will be considered as the income of Mr.A and Mrs.A”.

    This two sentences contradict. In clubing rule you told the income is clubbed with doner’s income ( ex: Rs 80,000/- is clubbed with husband and taxed as per his tax slab)

    Can you please clarify?


      1. Ok. Thanks a lot for your clarification.
        In that case, If I give my mother ( Housewife, Senior Citizen) Rs.30 Lakhs and she invested in Bank FD or Debt mutual fund and got 10% return in a year . The entire income of Rs. 3 Lakhs is taxfree ( since upto 3 Lakh is taxfree for senior citizen).
        Do not you think, it is a loophole in taxation law ?


          1. Thanks a lot Sir. In the above case, since her income is within 3L, she need not file IT returns. But she has to fill FATCA, for investing in mutual fund. She can show profession as housewife. What is the income she should show- 3L or 30L. Another question she needs fill in Fatca, is source of income. There is no option for gift income.

            1. Santosh-She has to show both Rs.3 lakh and whatever the gift she receive from you. Gift source and also the income source both need to declared in IT Filing. For FATCA, they not ask income range. But for KYC they ask the income range. In that case let her show as Rs.3 lakh. Also, in FATCA they not ask what is the source of income. Please chek.

  15. Sir,
    In the Kerala Treasury, I intend to start a Fixed deposit in my fathers name, who is a senior citizen, for getting 1% interest more. The principal amount is transferred from my SB account in Treasury for the FD, and finally, the maturity amount will come to my SB account there. In this case, who is liable to pay income come, myself or my father. Please clarify.

      1. Source of FD is from my SB account in Treasury. I am using his status of senior citizen to get more interest more. The source is my SB acount, and interest will come to my same SB account.

  16. I am NRE.
    We have bought a property on my wifes name.
    She is not NRE and an house wife.
    All the money raised per slab is transfered from my NRE accoun to her Saving account.
    Throught which she does the payment as and when slab demands are raised and the TDS.
    Is there any taxation on me or her which we need to pay every year while filing tax returns.

      1. Whom to show ?
        When to show ? Should she show it while filing Income tax or when she is asked by the department ?
        How to show ?

  17. I am asking a tricky question. Myself and my brother have some land jointly owned. But, he likes to get the full land from me, since, it is our family property.
    Please clarify, Can I give my portion of land to him as Gift, at the same time, Can he pay the value to me as Gift.
    Is it allowed under Income Tax Rules.

      1. Sir, I agree IT guys are not dumb. They may see both transactions, and ask questions. But, my doubt is what is technically wrong, since both the transactions are different, also it is allowed as per laws.

    1. Sir, no offence meant to you. It’s not a tricky question but rather a question on a public site about “laundering” money deliberately and consciously!

      As you asked, many CAs do that on percentage basis. As you are conscious about what you have asked, so I expect you will anyways do it. My suggestion is you better do it your way without the help of CA. If IT department raises a flag then you pay the penalty and tax due too. But whether you are assisted by CA or not, what you are doing is a clear fraud so don’t expect you will escape ‘somehow’ (if the IT department finds it). If the IT department starts a scrutiny, you can send a CA on your behalf of to the Assessment Officer to answer questions by them. Good luck.

  18. I am an NRI and planning to gift INR 100,000 to my dad in India. Is this amount taxable in either hands.

    Also, can my dad use this money to pay for purchase of property, where we both are joint owners.

    Further, do I need to get the gift deed done for this, if yes, what’s the stamp duty.

    Thanks for the help in advance.

    1. Mitesh-The earning is as usual taxable to you. There are no tax beenfits for you. However, your father will get tax free donation from your end. Also, whatever the earning is from this cash will be his OWN income. It will not be clubbed with you. A gift deed in simple letter is enough. No need of registering it.

      1. Thank you sir. Just to clarify – any funds I teansfer from my NRE account to my dad will not be taxable in hands of anyone of us. Also that funds can be used by my dad for any purpose.

  19. Following are the conclusion part regarding gift tax which I read in ‘taxguru’ site.

    “Conclusion :-
    Now from the above provisions, it is clear that any sum received from relatives, etc. is not to be included in Income from other sources and hence is not to be treated as Income, so there is no requirement to show those gifts in ITRs as it does not fall under the definition of Income chargeable to tax”.
    Please clarify once again that is it required to show gift income in ITR. (Since different opinions are told).

    As an alternative, if I make a GIFT DEED on plain paper, can I avoid showing it in ITR.

    1. Sir,
      Sorry to disturb you again. As mentioned by you, I checked it in ITR2.
      Gift income cannot be included in “income from other sourced”, since it will be added to total income. Also, there is no provision under “Exempted income”.
      So, if it should be declared for source, where gift income should be shown in ITR.
      Please reply.

  20. Sir,
    My father-in-law would like to give me Rs.20 lack as gift. I am an income tax payee. Since, it comes under Relatives, should I need to show the amount in my ITR.

      1. But, Sir, somwhere I read that since it is an income under gift from relative, it need not be considered as income. Is it correct ?.

          1. Sir, I am working in a private company. During the last year 2015-16, my company had deducted some amount as TDS from my salary and remitted to Govt. But, due to some internal problems in the company, I myself paid balance taxes directly as self assessment tax. Is it allowed ?. Please clarify.

                  1. Sir, Should I need to give details of self assessed taxes paid by ME directly like BSRcode, Challan No., etc. to company.

  21. HI
    can u advise me if I gift jewellery to my Wife or my sister of INR.65000 , Is this has tax rebate on taxable salary.
    I am salried person.

  22. I never knew so many Relative can gift me..

    I am going to talk with each and every one.. for they could save tax just by gifting small amount to me…. Hahaha.

    Bravo .. Stunning article..

    1q here..

    What if husband gifts wife in march last week… And wife invest the money in april..

    Who will get the tax for the interest.. Say if her hubby files tax return in april.???


  23. Hi Basu,

    Very good article.

    I bought a land on my mothers name 10 years back. I would like to transfer the land on my name. As per the tamilnadu government fee structure, there are two options mentioned.

    1. Gift Deed (Stamp Duty is 7%)
    2. Release Deed (Stamp Duty is 1%)

    Can I transfer the name through Release Deed? Please help me to understand the process.


  24. I think corrections are required:

    1. Under “Investing in the name of parents”: It should be “but NOT the income of Mr.X”.

    2. Under “Documentation of gift”: “you can write it as below and keep it for your reference”. That “below” information is missing!

    I found few others which may confuse readers.

  25. MY MOTHER-IN-LAW is a sr citizen and was doctor (now retd). If she gifts 15 lacs to her husband who has no income on his own- to invest it in sr citizen pension scheme on his name, whether the interest income of her husband will be clubbed with her income [of interest from same sr citizen scheme]?

    1. YES. Between husband and wife, income clubbing is applicable ALWAYS for gift taxation. If the interest (returns on investment) earned by her husband is taxable then while clubbing the same income is taxable as per her tax bracket. If the interest (returns on investment) are non taxable (like in tax free bonds, 1 year old mutual funds etc as article explained) then it is still clubbed in her income but as it is non taxable, she will not need to pay the tax on that returns (generated by Rs. 15 lakh).

  26. Hi Basu,

    My question is if i simply give my taxable income money to any of the specified relative, will i get tax exemption.

    I guess one cannot escape from paying tax, one has to pay tax from taxable income and then can gift money to specified relative and whatever invested money would be exempted or clubbed.

    Please confirm.


    1. Vinod-Mother to son gift means it is within a relative. So no tax for son on receiving such gift. However, if son is minor, then clubbing of income rules apply. Otherwise, it is purely his income.

  27. Dear Basu

    Thank you for the comprehensive article. I would like to reconfirm the gift provision applicablility between husband and wife and if the gift money is invested in only tax free provisions, would it have any tax liability?

  28. Hi basavaraj,
    I am a merchant navy NRI. Can I gift my wife who has no income and if she invests in equities and equity MF for long term. Will the capital gains by my wife will be clubbed with me? Moreover I don’t pay income tax in any country
    How this profits arise out of my gift money will be treated.

    Praveen kumar S

  29. Dear Basu,

    Thanks again for publishing an excellent blog. However I have a question.

    My mother is senior citizen house-wife, having no personal income from any source. If I gift her 10L, it is not taxable for her (as per # Invest in the name of parents). Now she invests the money in equity/debt mutual funds and gets say (10%) i.e 1L profit in a year. Since her income is 1L in that year, she will not pay tax ( upto 3L income tax-exempt). Now she gifts me back ( 10L + 1L profit) since it is a gift from relative it is not taxable for me.
    Again I gift her back 11L and she invests it in equity/debt mutual funds and earns 10% profit after one year (i.e 1.1L ).

    This cycle can continue and you can save tax till her taxable limit ( 3L) is crossed.

    Is my understanding correct ?


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