Understanding Gift Tax In India In 2025 – Rules, Exemptions, Tax Calculation

Gifting is a heartfelt way to express love and affection towards our dear ones. In 1958 by Parliament of India, the gift tax act was introduced to regulate tax on giving and receiving gifts under certain circumstances.

Over the years, the law has evolved and currently income tax on gifts is applicable on gifts with a total value of exceeding Rs 50,000 during a financial year. However, there are certain exemptions, especially on gifts received from close relatives or under special circumstances such as wedding or inheritance.

Let us take a detailed look at the exemptions

Gifts Under Rs 50,000 - Gifts received up to Rs 50,000 during a financial year are completely tax-free.

Gifts from relatives - Gifts received from the following relatives are exempt from tax

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.

Wedding gifts - Gifts received by a newly wedded couple, including cash, jewellery, property, stocks, or gold from their immediate family members are fully exempt from tax.

Gifts by Inheritance or Will - Any assets received as inheritance or through a will are tax-free under the Income Tax Act.

Gifts from trusts - Money received from local authorities, registered charitable trusts, universities, or foundations are generally exempt from tax. This also applies on financial assistance received by meritorious students or patients undergoing medical care.

Property received for inadequate consideration - If a property is received for a price less than its fair market value, the difference between the stamp duty value and the price paid is treated as a taxable gift.

How To Calculate Taxable Value Of Gift ?

Cash/ Cheque/ Bank Transfer - If the total value of the gift exceeds Rs 50,000, then the entire amount received as a gift is taxable.

Immovable property as gift - If the stamp duty value of the property exceeds Rs 50,000, then it is considered as taxable.

Immovable property bought at less than its stamp duty value - If the difference between the stamp duty value and the purchase price is more than Rs 50,000, then it is paid as taxable. For instance, if the stamp duty value is Rs 10 lakh and the purchase price is Rs 6 lakh, then the taxable amount is the difference Rs 4 lakh.

Assets like jewellery, shares, paintings, and sculptures - If the fair market value exceeds Rs 50,000, then that value is considered as the taxable amount.

Assets like jewellery, shares, paintings, and sculptures purchased for giving gifts - If the fair market value exceeds the original purchase price by more than Rs 50,000. The difference between the fair market value and the original purchase price. For example, if any one of such assets has a fair market value of Rs 4 lakh and was originally bought for Rs 1.5 lakh, the taxable amount is Rs 2.5 lakh.