New Delhi: As tax filers are all geared to file the ITR for Financial Year 2024-25 (Assessment Year 2025-26), it’s important to understand whether gifts received during the year should be declared in the Income Tax Return (ITR) or not.
What is considered a Gift? Are all gifts taxable? How to report them correctly? These are among the most frequently asked question by tax filers during ITR season.
CA Ruchika Bhagat, MD, Neeraj Bhagat & Co in an exclusive comment to Reema Sharma of Zee News said, “With the increasing digitization of the Indian tax system and stricter scrutiny by the Income Tax Department, taxpayers must be more careful than ever in disclosing all sources of income – including gifts.
Under the Income Tax Act, a gift can include:
· Cash or cheque
· Immovable property (land/building)
· Movable property (jewellery, shares, paintings, etc.)
Ruchika Bhagat says, if the aggregate value of such gifts exceeds Rs 50,000 in a financial year, and they are received without consideration. In that case, they may become taxable under the head “Income from Other Sources” (Section 56(2)(x), unless exempt.
Bhagat says not all gifts are taxable. The following gifts are exempt from tax:
1. Gifts from Relatives
Gifts received from a “relative” are fully exempt, regardless of the amount. The term “relative” includes:
· Spouse
· Brother/sister of the individual or spouse
· Brother/sister of either parent
· Any lineal ascendant or descendant of the individual or spouse
· Spouse of any of the above
2. Gifts on the Occasion of Marriage
Gifts received by an individual on their marriage are fully exempt, even if the amount exceeds Rs 50,000.
3. Gifts Received Under a Will or Inheritance
Gifts received through a will or inheritance are also not taxable.
4. Gifts from Specified Entities
Gifts received from certain institutions, local authorities, charitable trusts, or registered institutions are exempt.
Yes, taxable gifts must be declared in your ITR.
Bhagat explains, if the gifts are taxable under Section 56(2)(x), they should be reported under the head “Income from Other Sources” in the ITR.
Even exempt gifts should be reported for transparency.
Though not mandatory, it is advisable to disclose exempt gifts (like those from relatives, received at marriage, etc.) in the Schedule “Exempt Income” of your ITR. This helps avoid future scrutiny or queries from the Income Tax Department.
1. Login to the income tax portal.
2. Select the appropriate ITR form (usually ITR-1 or ITR-2 depending on your income).
3. Go to the section “Income from Other Sources”:
o Report taxable gifts exceeding ₹50,000 from non-relatives.
4. Go to the “Exempt Income” schedule:
o Report gifts from relatives, gifts received at marriage, etc.
5. Maintain proper documentation such as gift deeds, wedding invitations, bank statements, etc. to support your claim in case of assessment.
Common Mistakes to Avoid
· Not aggregating gifts from multiple non-relatives.
· Ignoring documentation for large gifts from relatives.
· Failing to report exempt gifts, which can trigger IT notices later.
Ruchika Bhagat cautions, “As the tax department strengthens its data analytics and surveillance, full and honest disclosure has become essential. While not all gifts are taxable, proper declaration – whether taxable or exempt – ensures transparency, avoids litigation, and upholds your credibility as a responsible taxpayer.”
If you received any significant gifts during FY 2024-25, make sure to analyze their nature, source, and value, and report them correctly while filing your ITR in 2025, she adds.
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