A comprehensive guide to gift taxation in India covering taxable and exempt gifts, Section 56(2)(x) provisions, reporting requirements, and practical examples for FY 2025-26.
Khush Dharmeshkumar Trivedi | Jun 18, 2026 |
Gift Received in FY 2025-26? Check Its Taxability Under Income Tax
As we are all aware, ITR due dates are approaching, and if you have received any gift in FY 25-26 & don’t know the tax consequences, then this article is for you!
The Core Rule: Section 56(2)(x)
Do you know that only Money or any kind received as a gift is not taxable, but if you acquired it with inadequate consideration, it will also give rise to taxability under this section?
Any sum of money or property received by an individual or HUF without adequate consideration is taxable as Income from Other Sources under Section 56(2)(x) unless it falls under a specific exemption.
This applies to gifts of money, immovable property, movable property (shares, jewellery, art, etc.), and even property received at below-market price or fair value.
| Type of Gift | Taxability Trigger | Amount Taxable |
| Cash/Money (including cheque, NEFT) | Aggregate > 50,000 in a FY | Entire amount (not just the excess over 50,000) |
| Immovable Property received free | Stamp duty value > 50,000 | Stamp duty value of the property |
| Immovable Property received/acquired at a low price | Stamp duty value exceeds consideration by > 50,000 AND > SDV > 110% of consideration | Stamp duty value minus actual consideration paid |
| Movable Property as notified (shares, securities, jewellery, art, bullion, archaeological collections, VDA), received free | Fair Market Value > 50,000 | Fair Market Value of the property |
| Movable Property, as mentioned above, was received at a low price | FMV exceeds consideration by > 50,000 | FMV minus actual consideration paid |
EXEMPT GIFTS
Not all gifts are taxable, as there are exemptions available under which gifts will not be taxable.
Relative definition:
| Sr. No | Relative | Note |
| 1 | Spouse | A gift from husband to wife or vice versa is fully exempt. But income earned from the gifted amount may be clubbed under Section 64(1) |
| 2 | Brother or Sister | Full siblings, both paternal and maternal. |
| 3 | Brother or Sister of the Spouse | Spouse’s siblings (brother-in-law, sister-in-law). |
| 4 | Brother or Sister of Either Parent | Paternal uncle/aunt, maternal uncle/aunt all covered. |
| 5 | Lineal Ascendant / Descendant | Parents, grandparents, great-grandparents AND children, grandchildren. The lineage goes both up and down. |
| 6 | Lineal Ascendant / Descendant of Spouse | Spouse’s parents (in-laws), spouse’s grandparents, spouse’s children from prior marriage. |
| 7 | Spouse of any person listed above (1 to 6) | E.g., spouse of uncle = aunt. Spouse of sibling = brother/sister-in-law’s spouse. |
Note: Gift from Employer to Employee is NOT exempt under Section 56(2)(x) & will be taxable as perquisite under the head of Salary.
What if you resell the gifted immovable property?
Cost of Acquisition for Future Capital Gains
When you later sell the property, the cost of acquisition will be:
Common Gift Scenarios: Taxable or Not?
| Scenario | Taxable? | Reason |
| Father gifts 10L cash to son | NO | Relative. Fully exempt. |
| Friend gifts 60,000 cash on birthday | YES | Non-relative gift. Aggregate 60K > 50K threshold. Full 60K taxable. |
| Grandmother gifts gold jewellery worth 3L | NO | Grandmother is Relative. Fully exempt. |
| Cousin gifts 75,000 | YES | Cousin is NOT a relative under the definition. 75K fully taxable. |
| Wedding gift of 5L from office colleagues. | NO | Received on occasion of own marriage fully exempt regardless of amount or source. |
| NRI uncle sends 2L to nephew in India | NO | Uncle is brother of parent. Relative. Exempt. |
| Employer gives Diwali gift of 7,000 | YES | Taxable as perquisite under Salary head (not Other Sources). |
| Friend gifts flat worth 30L (stamp duty value 28L) | YES | Non-relative. Stamp duty value 28L > 50K. 28L fully taxable as Other Sources. |
| Property inherited via Will from deceased parent | NO | Inheritance is fully exempt under Section 56(2)(x). |
| Gifts from 5 different friends totaling 55,000 | YES | Aggregate from all non-relatives 55K > 50K. Full 55K taxable. |
| Mother-in-law gifts 2L cash | NO | Mother-in-law is lineal ascendant of spouse. Relative. Fully exempt. |
How to Report Gift Income in ITR
| Situation | ITR Form | Where to Report |
| Taxable gift (cash or property) received | ITR-1 / ITR-2 | Schedule OS (Income from Other Sources) → Any other income → describe as gift received from [name] taxable u/s 56(2)(x) |
| Exempt gift from relative | ITR-1 / ITR-2 | Schedule EI (Exempt Income) → mention the amount and nature. Optional but recommended for large amounts to tackle AIS queries. |
| Gift received on marriage | ITR-1 / ITR-2 | Schedule EI → describe as ‘Gift received on occasion of marriage exempt u/s 56(2)(x)’ |
| Gifted property sold later | ITR-2 / ITR-3 | Schedule CG → use cost-to-previous-owner as cost of acquisition & include previous owner’s holding period for LTCG classification |
Documents to Maintain for Gift Transactions
| Type of Gift | Documents to Keep |
| Cash gift from relative | Gift deed (preferably notarized), bank transfer proof, relationship proof Aadhaar/PAN link showing relationship, family tree affidavit |
| Gift of immovable property | Registered gift deed (mandatory property gifts must be through registered deed), original cost documents of donor (for future capital gains), stamp duty valuation certificate |
| Gift of shares/MF units | Gift deed specifying securities transferred, depository transfer slip/CDSL-NSDL transfer statement, original purchase records of donor |
| Wedding gifts | Wedding invitation card, gift register (list contains who gave & what), bank statements showing amounts received |
| Gifts received under Will | Registered Will, succession certificate, legal heir certificate, asset transfer documents |
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