To avoid gift tax in India, ensure the total value of gifts from non-relatives does not exceed ₹50,000 per financial year. Gifts from defined "relatives" (spouse, parents, siblings, children, etc.) are entirely tax-exempt. Additionally, gifts received on marriage, via inheritance/will, or in contemplation of death are tax-free.
So, can't avoid gift tax on Rs. 1 crore in India. However, if this gift is received from a relative, or inheritance, or received in marriage, then you do not have to pay any taxes. Can I save tax by gifting money to parents?
As per section (3) of the Gift Tax Act, 1958, gift tax was abolished in India in 1998. You will not be taxed on the gifts received from relatives. Gifts received (from relatives or non-relatives) on the occasion of marriage, under a Will, or in contemplation of death of the donor are tax-free.
So, for example, if you receive ₹5 lakh from your sister, or gift ₹10 lakh to your son, there is no tax liability on the gift amount in either case.
Tax on gifts in India falls under the purview of the Income Tax Act as there is no specific gift tax in India after the Gift Tax Act, 1958 was repealed in 1998. Gifts up to Rs. 50,000 per annum are exempt from tax in India.
Generally, the following gifts are not taxable gifts.
The gift tax is a federal tax assessed on transfers of cash or property valued above a certain threshold. Gift tax is paid by the giver of money or assets, not the receiver. This threshold is so high that few people end up having to pay the gift tax.
Legally, you can gift a family member as much as you wish. However, there may be tax implications if the amount exceeds your annual exemption. Not every gift will be subject to tax and whether tax will need to be paid will depend on who you give money to and how much money is given.
The annual gift tax exclusion of $19,000 for 2026 is the amount of money that you can give as a gift to one person, in any given year, without having to pay any gift tax. This limit rose from $18,000 in 2024 to $19,000 in 2025, where it will remain in 2026.
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
Taxation on Gifts – Exemption
Brother or sister of the individual's spouse. Brother or sister of either of the individual's parents. Individual's Lineal ascendant or descendant. Lineal ascendant or descendant of the individual's spouse.
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Gifts up to ₹50,000 in a financial year: Any gift below this threshold is fully exempt. If the total exceeds ₹50,000, the entire amount becomes taxable. Example: If you receive ₹30,000 from one friend and ₹25,000 from another, the total ₹55,000 is taxable.
Your spouse or civil partner
You do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless: you separated and did not live together at all in that tax year.
Gift from properties of HUF: Karta of HUF, can make gift to other coparceners, members or even others. However, It must preferably be in accordance with family traditions and must also be reasonable so that it is acceptable to all concerned.
Taking both 7 year periods together means that you need to know how much of the NRB has been used on chargeable transfers ('chargeable' gifts) for up to 14 years before death. This is what's known as the 14 year shadow (or sometimes the 14 year rule).
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“Gifts” can be made in cash or other assets – securities, closely held business interests, real estate, artworks, collectibles or any other type of property. So long as the total market value of your gifts does not exceed $19,000 per recipient in 2026, the transfers are entirely gift tax-free.
For smaller gifts, an individual taxpayer can benefit from the annual gift tax exclusion, which allows you to gift up to $19,000 per recipient in 2026 ($38,000 for married couples filing jointly) without having to pay taxes. There is no limit to the number of individuals you can gift this amount to in a year.
Generally, from a tax perspective, it is more advantageous to inherit a home rather than receive it as a gift before the owner's death.
HMRC can impose financial penalties when gifts are not declared correctly and the Executors may be liable to pay these penalties themselves. However, it is not always the Executors who are responsible for the payment of the penalties.