Direct and Indirect Taxation · Income from Other Sources

Gifts and Receipts Without Consideration: Taxability and Exemptions

Updated 10 October 2026 · Fact-checked

Under section 92(2)(m) of the Income-tax Act, 2025, money or specified property received without or for inadequate consideration is taxable as Income from other sources when it crosses the limit. Check the limit, then check exemptions such as relatives, marriage, inheritance or will. If none applies, tax the amount.

Understand Gifts and Receipts Without Consideration

A gift is a receipt with no payment in return. The Act does not tax every gift. It taxes a gift only when the receiver gets more than the Rs. 50,000 limit in the tax year and no exemption applies. The charge sits under the head Income from other sources.

Three kinds of receipt are covered. First, money received without consideration. Second, immovable property (land or building) received free or for less than its stamp duty value. Third, other property received free or for less than its fair market value. Other property means only the listed items: shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, bullion and virtual digital assets. A car, furniture or a laptop is not on the list, so receiving it free is not taxed under this clause.

The tests differ. For money, the total received in the tax year from all persons is tested against Rs. 50,000; if it exceeds, the whole sum is taxable. For free immovable property, the stamp duty value is taxed if it exceeds Rs. 50,000. For immovable property bought at a low price, the excess of stamp duty value over the price is taxed only if that excess is more than the higher of Rs. 50,000 or 10% of the consideration. For other property bought cheaply, the excess of fair market value over the price is taxed if the difference exceeds Rs. 50,000.

Then apply the exemptions in section 92(3). Receipts from a relative, on the occasion of the individual's marriage, under a will or by inheritance, in contemplation of death of the payer, from a local authority, from or by a registered non-profit organisation, certain transfers not regarded as transfer, and certain trusts for relatives are all outside this charge. Most exam questions are really about spotting which of these applies.

Key rules to remember

Money received without consideration: If total received in the tax year > Rs. 50,000, the whole sum is taxable; Total from all persons is added. If the total is Rs. 50,000 or less, nothing is taxable. Once above, the whole amount is taxed, not just the excess.
Immovable property received without consideration: Taxable = stamp duty value, if stamp duty value > Rs. 50,000; The whole stamp duty value is taxed, not the excess over Rs. 50,000.
Immovable property received for consideration: Taxable = stamp duty value − consideration, if this excess > higher of (Rs. 50,000 or 10% of consideration); If the excess is at or below the higher figure, nothing is taxable. If above, the full excess is taxed.
Other property received without consideration: Taxable = aggregate fair market value, if it exceeds Rs. 50,000; Applies only to the listed property: shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, works of art, bullion, virtual digital assets.
Other property received for inadequate consideration: Taxable = fair market value − consideration, if the difference > Rs. 50,000; Only the excess is taxed. The test is on the difference, not the total value.
Date of agreement rule for immovable property: Use stamp duty value on date of agreement if consideration was paid, wholly or partly, by specified banking or online mode on or before that date; Applies when agreement date and registration date differ.
Relatives of an individual: Spouse; brother or sister; spouse's brother or sister; brother or sister of either parent; lineal ascendants or descendants; lineal ascendants or descendants of spouse; and spouse of persons in the sibling, parent's sibling and lineal groups; For an HUF, any member is a relative. Cousins, friends and the spouse's parent's siblings are not listed.

How to solve Gifts and Receipts Without Consideration questions

Use the same order in every question. It shows the examiner you know the structure and earns step marks.

1Identify the receiver and the giver. Note whether the giver is a relative, a trust, a local authority or a registered non-profit organisation.
2Classify what was received: money, immovable property, listed other property, or unlisted items such as a car or furniture.
3Check for an exemption in section 92(3): relative, marriage of the individual, will or inheritance, contemplation of death, local authority, non-profit, non-transfer transactions, trust for relatives.
4If no exemption applies, find the value: cash amount, stamp duty value, or fair market value. Use the date-of-agreement stamp duty value where the question gives it and the banking condition is met.
5Apply the correct threshold test for that type of receipt. Add all cash gifts of the year before testing Rs. 50,000.
6Decide the taxable amount: whole sum, whole value, or excess over consideration, as the rule requires.
7Show the amount under Income from other sources and state your conclusion in one line.

Quickest way: Two-question filter

When to use it: Use this for MCQs and for each item in a multi-gift question.

Ask: is the giver a relative or is the occasion exempt? If yes, taxable amount is nil. Stop.
If no, ask: is it cash, immovable property or listed property? If not listed, nil.
For cash and free property: over Rs. 50,000, tax the whole value.
For a cheap purchase: compute the difference and compare with the limit. Property bought at less than stamp duty value needs the higher of Rs. 50,000 or 10% of the price.

Common mistakes in Gifts and Receipts Without Consideration

Taxing only the excess over Rs. 50,000 on cash gifts.
Students mix this rule with a basic exemption limit.
Fix: If the total exceeds Rs. 50,000, the whole sum is taxable. If it is Rs. 50,000 or less, nil.
Treating all gifts from friends or cousins as exempt.
Students assume anyone from the family is a relative.
Fix: Use the defined list only. Cousins and friends are not relatives, so their gifts are tested against the limit.
Taxing a gift of a car, furniture or a laptop.
Students forget that other property means only the listed items.
Fix: Check the list: shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, works of art, bullion, virtual digital assets.
Using the 10% tolerance for other property or using only Rs. 50,000 for immovable property.
The two inadequate-consideration rules look similar.
Fix: For immovable property use the higher of Rs. 50,000 or 10% of the consideration. For other property use only Rs. 50,000 on the difference.
Adding gifts from relatives to the Rs. 50,000 total.
Students total every receipt of the year.
Fix: Remove exempt receipts first. Only gifts that are not exempt go into the test.
Ignoring the date-of-agreement rule.
Students always use the registration-date value.
Fix: If the agreement and registration dates differ and part payment was made by specified banking or online mode on or before the agreement date, use the stamp duty value on the agreement date.

Worked examples

Example 1

Mr. Rohan Mehta, an individual, received in the tax year 2026-27: Rs. 30,000 from his friend Arun, Rs. 25,000 from his cousin Kavita, Rs. 1,00,000 from his father's brother, and Rs. 40,000 from his wife on his birthday. Compute the amount taxable under Income from other sources.

Show the solution

Father's brother is a relative (brother of a parent). Rs. 1,00,000 is exempt.
Wife is a spouse, so a relative. Rs. 40,000 is exempt.
Friend Arun is not a relative. Rs. 30,000 is counted.
Cousin Kavita is not in the list of relatives. Rs. 25,000 is counted.
Total from non-relatives = Rs. 30,000 + Rs. 25,000 = Rs. 55,000.
Rs. 55,000 exceeds Rs. 50,000, so the whole sum is taxable.

Answer: Rs. 55,000 is taxable under Income from other sources.

Example 2

Ms. Neha Iyer bought a plot from an unrelated seller on 10 January 2027 for Rs. 20,00,000. The stamp duty value on that date was Rs. 21,50,000. Separately, she bought 100 shares from an unrelated person for Rs. 2,00,000 when their fair market value was Rs. 2,45,000. Compute taxable amounts. Assume agreement and registration on the same date.

Show the solution

Plot: excess = Rs. 21,50,000 − Rs. 20,00,000 = Rs. 1,50,000.
Higher of Rs. 50,000 and 10% of Rs. 20,00,000 (Rs. 2,00,000) is Rs. 2,00,000.
Excess Rs. 1,50,000 is not more than Rs. 2,00,000, so nothing is taxable on the plot.
Shares are listed property. Difference = Rs. 2,45,000 − Rs. 2,00,000 = Rs. 45,000.
Rs. 45,000 does not exceed Rs. 50,000, so nothing is taxable on the shares.

Answer: Nil is taxable on both purchases.

Exam tips

Write the exemption check as the first line of your answer. Even if the answer is nil, you earn marks for the reasoning.
In MCQs, watch for gifts of non-listed items and for gifts from relatives. Both give a nil answer.
Always show the 10% test separately for immovable property. Examiners often set the excess just below or above the higher figure.
Add non-exempt cash gifts across the year before applying Rs. 50,000. A question may give several small gifts.
Quote the relative definition from the list when a relationship is borderline, such as a spouse's brother or a cousin.

Practice questions from Income from Other Sources

Gifts and Receipts Without Consideration in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Gifts and Receipts Without Consideration: frequently asked questions

Is a gift from a friend taxable?

A friend is not a relative. If cash gifts from friends and other non-relatives total more than Rs. 50,000 in the tax year, the whole sum is taxable under Income from other sources. If the total is Rs. 50,000 or less, it is not taxed. Gifts received on the individual's own marriage are exempt.

Who is a relative for gift taxation?

For an individual, relatives include the spouse, brothers and sisters, the spouse's brothers and sisters, the brothers and sisters of either parent, and lineal ascendants and descendants of the individual and the spouse. The spouse of the persons in the sibling, parent's sibling and lineal groups is also a relative. For an HUF, any member is a relative.

Are gifts on marriage taxable?

Gifts received on the occasion of the individual's own marriage are outside the charge. The exemption is for the individual who is marrying. It does not cover gifts on a friend's wedding or on an anniversary.

What is the difference between gifts from relatives and non-relatives?

Gifts from relatives are outside section 92(2)(m) regardless of the amount. Gifts from non-relatives are taxable when they cross the specified limits and no other exemption applies.