How Is Money In Cash Received As Gifts, Taxed For Income Tax Purposes?

Often individuals ask a question, what if I receive a gift and in cash or cheque, how is the same going to be taxed.

If you are an individual or HUF, If the following conditions are satisfied then any sum of money received (i.e, monetary gift may be received in cash, cheque, draft, etc.) by an individual/ HUF will be charged to tax :

• Sum of money received without consideration
• The aggregate value of such sum of money received during the year exceeds Rs. 50,000.

​​​​If any sum of money is received on or after 01/10/2009 by an Individual or HUF without any consideration and the aggregate value of which exceeds Rs. 50,000 during the previous year, then the whole of the aggregate value of such sum is chargeable to tax.

However, in the following cases nothing will be charged to tax in respect of any sum of money received by an Individual or HUF without any consideration if the same is received:​

• from any relative or by a HUF from its members; or
• on the occasion of the marriage of the individual; or
• under a will/ by way of inheritance; or
• in contemplation of death of the payer or donor as the case may be; or
• from a local authority as defined under Explanation to clause (20) of Sec 10 of the Income-tax Act, 1961; or
• from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in Sec 10 (23) ; [w.e.f. AY 2023-24, this exemption is not available if a sum of money is received by a specified person referred to in Sec 13 (3). or
• by any fund, trust, institution, any university, other educational institution, any hospital, other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of Sec 10 ; or (applicable if the money is received on or after 1st day of April, 2017)
• from or by a trust or institution registered under Sec 12a, Sec 12aa or Sec 12ab [w.e.f. AY 2023-24, this exemption is not available if a sum of money is received by a specified person referred to in Sec 13 (3)]. or​​;
• from an Individual by a trust created or established solely for the benefit of relative of the Individual. (applicable if the money is received on or after 1st day of April, 2017)
• from such class of person's and subject to such conditions as may be prescribed.
• From any person, in respect of any expenditure actually incurred by individual on his medical treatment or treatment of any member of his family, for any illness related to COVID-19 (subject to such conditions as prescribed by Govt.).

One has to be very careful, when understanding the various sections and its implications. It is better, if you have received large sums of money by way of gifts to seek professional help of a Chartered Accountant, when filing your tax returns. These norms keep changing and hence once must keep themselves abreast with the lastest income tax rules.