In India for the financial year 2025 (Assessment Year 2026-27), gifts with a total value exceeding ₹50,000 from non-relatives in a financial year are fully taxable as "Income from Other Sources". Gifts from specified relatives, such as spouses, parents, or siblings, are tax-exempt regardless of the amount.
How much can you give tax-free in 2025? Each year, the IRS adjusts the annual gift tax exclusion for inflation. In 2025, that exclusion increases to $19,000 per recipient, up from $18,000 in 2024. You can gift this amount to as many recipients as you like with no impact on your lifetime estate and gift tax exemption.
Cash or gifts received upto Rs. 50,000 during a financial year are exempt from tax; however, in case of gifts of a value higher than this threshold, the entire amount is taxable in the hands of the recipient.
Yes, it is tax-free for both the sender and the receiver, provided you stay within the annual gift tax exclusion limit ($18,000 for 2024) and the recipient in India is a “relative” as per Indian tax law.
Can NRIs carry cash for their family members when visiting India? Yes, NRIs can bring cash for their family members, but the limits of US $5,000 in cash and US $10,000, including cash and traveler's cheque, apply.
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.
General rules for gifts that come from abroad
However, the United States has no foreign gift tax1, and the gift does not count as taxable income, so no taxes are typically due. (However, if the asset gifted generates income (such as from an inherited rental property), that will likely be counted as taxable.)
No, you generally do not have to report a gift as income because the IRS considers gifts tax-free for the recipient; the person giving the gift is responsible for any gift tax, and they only have reporting requirements if the gift exceeds the annual exclusion amount (e.g., $19,000 per person in 2025) and their lifetime exemption. You only need to worry about reporting it if the gifted asset generates its own income (like interest or dividends) or if the gift comes from a foreign person, which has different reporting thresholds.
To Relatives – Any amount transferred to parents, spouse, children, or siblings is fully tax-free under the Gift Deed Rules in Income Tax. To Non-Relatives – Up to ₹50,000 per financial year is tax-free. Any amount exceeding this is added to the recipient's income and taxed accordingly.
You do not pay tax on a cash gift, but you may have to pay tax on any income that the cash gift generates. For example, if you place the cash gift in a bank or building society account, you may have to pay tax on the interest you earn on that account.
Step-Up in Basis for Inherited Assets
One tax advantage of leaving assets after death is the step-up in basis. This provision allows heirs to inherit assets at their fair market value at the time of death, effectively resetting the capital gains tax to zero for any appreciation during the decedent's lifetime.
Yes, you can give your son $100,000 tax-free in 2025 by utilizing the annual gift tax exclusion and your lifetime exemption, but you'll need to report the gift to the IRS on Form 709 since it exceeds the $19,000 annual limit, though you won't pay tax unless you exceed your much larger $13.99 million lifetime gift/estate tax exemption. The gift is considered yours (the giver) for tax purposes, not your son's.
What is the IRS limit for inheritance? There is no federal inheritance tax, so the limit will vary from state to state. There is, however, a federal estate tax exemption of $13.99 million per individual and $38,000 per married couple, if filing and electing gift splitting, in 2025.
The Reserve Bank of India (RBI) governs such transactions through the FEMA (Foreign Exchange Management Act). NRIs can repatriate up to $1 million per financial year from India, including proceeds from the sale of property.
Sending money to family members as a gift is usually not taxed in India. Money you send from your foreign salary is also generally not taxed in India. In the US, gifts over a certain amount must be reported, so it is best to check the current gift tax limits.
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.
From April 2025, the government has maintained the Rs. 7 lakh exemption limit and specified that only amounts above Rs. 7 lakh will attract TCS. Transfers made for education and medical purposes are charged at a lower rate of 5%, and if funded through loans from financial institutions, the TCS remains 0.5%.
If you spend more than the annual exclusion amount ($19,000 in 2025 and 2026), you'll have to file a gift tax return. Spreading out gifts or paying qualified medical or educational expenses directly, rather than giving money to the recipient, is another way to potentially avoid paying gift tax.
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.
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.