Taxability of Gifts Received by Individual or HUF Member u/s 56(2)x

People from all over the world love to present gifts to their loved ones on different occasions. In this practice, it is seen in several cases that valuable assets/large sums of money are transferred and thus, from FY 2004-05 onwards, Government has considered to add tax on gifts to be applicable as receiver’s income under the head ‘Income from Other Sources’. Gifts, of type movable/immovable assets as received by an individual/a member of HUFs without/with consideration more than a threshold value would be treated as taxable under the clause (x) of Section 56(2) of Income Tax Act that is introduced in Finance Act 2017.

Note: A ‘Gift’ as defined u/s 122 of the Transfer of Property Act, 1882, is the transfer of any movable/immovable property which has been made by one person voluntarily and without any consideration to another person. ‘Donor’ is one who presents a gift and ‘Donee’ is the person who is receiving a gift.

Types of Gifts Eligible of Taxation u/s 56(2)x income tax act.

Receipt provided for a sum of money or immovable property that is more than INR 50 thousand is taxable in the hands of the receiver. The Gifts include:

Gift in Cash:-

  • Money received without consideration with aggregate value more than INR 50 thousand. This whole amount is taxable.

Immovable Property:-

  • Immovable property without consideration, when its Stamp Duty Value is more than INR 50 thousand. Whole Stamp Duty amount is taxable.
  • Immovable property with consideration, when its Stamp Duty more than the highest amount of the following:
    • INR 50 thousand
    • 5% of the consideration

Difference of Stamp Duty and Consideration Value is taxable.

Movable Property:-

  • Aggregate Fair Market Value (FMV) of movable property (defined and specified) if it is more than INR 50 thousand. This whole amount is taxable.
  • Movable property (defined and specified) with consideration, lower than FMV but more than INR 50 thousand. Difference of Property Value and Consideration Value is taxable.

Tax-Free Gifts as Defined u/s 56(2)x (Fully Exempt under Income Tax.)

Certain gifts are considered Tax-Free u/s 56(2)x, if they satisfy any of these conditions:

  • Gifts given by relatives is exempt.
  • Any gift of the type movable/immovable asset that is received from specific relatives is tax free.

For individuals, gifts from these relatives are tax-free:

  • Spouse
  • Brother/Sister
  • Any inherent ascendant or descendant
  • Brother/Sister of either of the parents
  • Brother/Sister of the spouse
  • Any inherent ascendant or descendant of the spouse

For HUFs, gifts from these relatives are tax-free:

  • Any member


  • Gifts received in these circumstances/from the source as mentioned:
    • Marriage
    • Provision in a will/Inheritance
    • Protocol followed after the death of a donor
    • Local authority as defined in clause 20 of Section 10
    • Any fund/Foundation/Other educational institution/University/ Hospital/Other medical institution/Any trust or institution as defined u/s 10
    • Any trust/ institution registered under section 12A or section 12AA
    • Any transaction from trust/institution that is not regarded as transfer u/s Section 47
    • Any individual by a trust that serves for the benefit of any relative of an individual
    • Compensation (other than payment), received to the employee in relation to the termination of employment/modification of employment terms and conditions applicable in such circumstances


Note: Any gifts received from a person, who is not a relative are taxable if they satisfy the tax eligibility as mentioned in Section 56(2)x.

  List of Donors as per definition of relatives under Income Tax Act

  • Father (Papa or Pitaji)
  • Mother (Maa or Mummy)
  • Brother (Bhai)
  • Sister (Bahin)
  • Son (Beta or Putra)
  • Daughter (Beti or Putri)
  • Grand Son (Pota or Potra)
  • Grand Daughter (Poti or Potri)
  • Husband (Pati)
  • Wife (Patni)
  • Sister’s Husband (Jija)
  • Brother’s Wife (Bhabhi)
  • Wife’s Brother (Sala)
  • Wife’s Sister (Sali)
  • Husband’s Brother (Dewar)
  • Husband’s Sister (Nanad)
  • Mother’s Brother (Mama)
  • Mother’s Sister (Mausi)
  • Mother’s Sister Husband (Mausa)
  • Wife’s brother’s wife (Sala Heli)
  • Father’s Brother (Chacha or Tau)
  • Father’s Brother’s Wife (Chachi or Tai)
  • Father’s Sister’s Husband(Fufa)
  • Father’s Sister (Bua)
  • Grand Father (Dada, Pardada)
  • Grand Mother (Dadi, Pardadi)
  • Daughter’s Husband (Jawai)
  • Son’s Wife (Bahu or Putra Vadhu)
  • Spouse Father (Sasur)
  • Spouse Mother (Sas)
  • Spouse Grand Father (Dada Sasur)
  • Spouse Grand Mother (DadiSas)
  • Brother’s Wife (Bhabhi)
  • Mother’s Brother’s Wife (Mami)
  • Husband’s Brother’s Wife (Devrani or Jithani)

Author is a Krishna Gopal Varshney and can be reached at E-Mail:-