Tax Laws and Practice · Income from Other Sources

Taxability of Gifts and Receipts Without Consideration

Updated 11 October 2026 · Fact-checked

Under section 92(2)(m) of the Income-tax Act, 2025, money or specified property received without consideration, or for inadequate consideration, is taxed in the recipient's hands under Income from other sources if it crosses the Rs. 50,000 limits. Gifts from relatives and the other cases in section 92(3) are not taxed.

Understand Gifts and Receipts Without Consideration

Section 92(1) is a residuary rule. Any income not excluded and not taxable under the heads in section 13(a) to (d) falls under Income from other sources. Section 92(2)(m) is a specific rule inside it. It taxes the recipient of certain gifts.

The idea is simple. If you receive money or valuable property free, or at a price far below its value, the law treats the benefit as income. This stops people from moving untaxed wealth through gifts.

The rule covers three kinds of receipt. First, money received without consideration. Second, immovable property (land or building or both), valued at stamp duty value. Third, other property (shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, bullion, virtual digital asset), valued at fair market value. Only these items are "property" for this rule. A gift of a car or furniture is not covered.

The tests are applied each tax year, in aggregate, across all givers. Then comes the long list of exemptions in section 92(3). The most tested are gifts from a relative, gifts on the occasion of the individual's marriage, gifts under a will or by inheritance, and gifts in contemplation of death of the payer or donor. Gifts from a registered non-profit organisation and from local authorities are also outside the rule. The exemptions apply to every limb of clause (m), not only to money.

So your job in an answer is: classify the receipt, apply the threshold, then check each exemption before computing the taxable amount.

Key rules to remember

Money received without consideration: If total money received in the tax year > Rs. 50,000, the whole sum is taxable; Section 92(2)(m)(i). It is a cliff, not a slab. If total is Rs. 50,000 or less, nothing is taxed. Total is counted across all givers in the year.
Immovable property received without consideration: If stamp duty value > Rs. 50,000, the stamp duty value is taxable; Section 92(2)(m)(ii)(A). The whole stamp duty value is taxed, not the excess over Rs. 50,000.
Immovable property received for inadequate consideration: Taxable = stamp duty value − consideration, if (stamp duty value − consideration) > higher of Rs. 50,000 or 10% of consideration; Section 92(2)(m)(ii)(B). Only the excess is taxed. Compare the excess with the higher of the two limits.
Other property received without consideration: If aggregate fair market value > Rs. 50,000, the whole aggregate fair market value is taxable; Section 92(2)(m)(iii)(A). Aggregate is of all such property received in the tax year.
Other property received for inadequate consideration: Taxable = aggregate fair market value − consideration, if (aggregate FMV − consideration) > Rs. 50,000; Section 92(2)(m)(iii)(B). No 10% test here. Only the excess is taxed.
Date of agreement rule for immovable property: Use stamp duty value on the date of agreement if agreement date and registration date differ and consideration (whole or part) is paid by specified banking or online mode on or before the agreement date; Section 92(4)(a). Without such payment, the value on the date of registration applies in practice.
Relative (individual): Spouse; brother or sister; brother or sister of spouse; brother or sister of either parent; lineal ascendant or descendant; lineal ascendant or descendant of spouse; spouse of any of the persons from brother or sister onward; Section 92(5)(g). For a Hindu undivided family, any member is a relative.

How to solve Gifts and Receipts Without Consideration questions

Use this order for any question on gifts or receipts without consideration. Do not compute before checking exemptions.

1Identify the recipient and the tax year. The tax falls on the recipient, not the giver.
2Classify each receipt: money, immovable property, or other property (shares, jewellery, bullion, art, virtual digital asset and so on). Anything else, such as a car, is outside the clause.
3Check section 92(3) exemptions: relative, marriage of the individual, will or inheritance, contemplation of death, local authority, registered non-profit organisation, specified non-transfer transactions, trust for relatives.
4Select the value: money at face value, immovable property at stamp duty value (date of agreement if conditions are met), other property at fair market value.
5Apply the test for each limb. Without consideration: whole value if above Rs. 50,000. For inadequate consideration: the excess, if it passes the threshold (higher of Rs. 50,000 or 10% for immovable property).
6Add the taxable amounts and show them under Income from other sources. State a clear conclusion with the section reference.

Quickest way: Relative first, then threshold

When to use it: Use when the question lists several gifts from different people and time is short.

Strike out every gift from a relative, at marriage, by inheritance or will, and from the other exempt sources. These never enter the total.
Group the balance: money total, immovable property, other property.
Test money total against Rs. 50,000. If above, tax the whole.
For property at a price, compute the excess first, then compare with Rs. 50,000 (and 10% of consideration for immovable property).
Write the amount taxable and the reason for each exclusion in one line each.

Common mistakes in Gifts and Receipts Without Consideration

Taxing only the amount above Rs. 50,000 on money or free property.
Students treat Rs. 50,000 as a basic exemption slab.
Fix: For receipts without consideration the whole amount is taxed once the limit is crossed. Rs. 50,000 or less is nil; above it, everything.
Testing each gift separately for money.
Students look at each cheque alone.
Fix: The law refers to the total received in the tax year from any person or persons. Add all non-exempt money gifts before testing.
Treating all gifts from friends or in-laws as exempt.
Confusion about the definition of relative.
Fix: Use the list in section 92(5)(g). A friend is not a relative. A spouse's brother or sister is. A cousin is not covered.
Using fair market value for immovable property.
Students apply the rule for other property to land and buildings.
Fix: Immovable property is valued at stamp duty value. Fair market value applies to other property.
Forgetting the 10% buffer for immovable property bought below stamp duty value.
Students compare the excess with Rs. 50,000 only.
Fix: Compare the excess with the higher of Rs. 50,000 or 10% of consideration. If the excess is within it, nothing is taxable. If it exceeds it, tax the full excess.
Applying the rule to a car or furniture gift.
Students assume any asset is covered.
Fix: Only the listed capital assets count as property. Check the list in section 92(5)(f) before computing.

Worked examples

Example 1

Rohan, an individual, received in the tax year: Rs. 30,000 from his friend Amit on his birthday, Rs. 40,000 from his colleague Neha, Rs. 2,00,000 from his wife's brother, and Rs. 5,00,000 from his father. Compute the amount taxable under Income from other sources.

Show the solution

The recipient is Rohan. The receipts are money without consideration, so section 92(2)(m)(i) applies.
Wife's brother is a brother of the spouse, which is a relative under section 92(5)(g). Father is a lineal ascendant, also a relative. Section 92(3)(a) excludes both: Rs. 2,00,000 and Rs. 5,00,000 are not taxed.
The remaining receipts are from Amit (Rs. 30,000) and Neha (Rs. 40,000), who are not relatives. Total = Rs. 70,000.
Rs. 70,000 exceeds Rs. 50,000, so the whole sum is taxable.

Answer: Rs. 70,000 is taxable under Income from other sources. The gifts from the wife's brother and father are exempt.

Example 2

Meera purchased a plot of land from an unrelated seller for Rs. 20,00,000. The stamp duty value on the date of registration was Rs. 23,00,000. Agreement and registration were on the same date. Separately, she bought shares with fair market value Rs. 4,00,000 from an unrelated person for Rs. 3,60,000. Compute the amount taxable under section 92(2)(m).

Show the solution

Land is immovable property bought for consideration, so section 92(2)(m)(ii)(B) applies.
Excess = stamp duty value Rs. 23,00,000 − consideration Rs. 20,00,000 = Rs. 3,00,000.
Limit = higher of Rs. 50,000 and 10% of Rs. 20,00,000 (Rs. 2,00,000) = Rs. 2,00,000.
Excess Rs. 3,00,000 is more than Rs. 2,00,000, so the excess Rs. 3,00,000 is taxable.
Shares are other property. Excess of fair market value over consideration = Rs. 4,00,000 − Rs. 3,60,000 = Rs. 40,000.
Rs. 40,000 does not exceed Rs. 50,000, so nothing is taxable for the shares.
Total taxable = Rs. 3,00,000 + nil.

Answer: Rs. 3,00,000 is taxable under Income from other sources, being the excess on the land. The shares attract no tax.

Exam tips

Always write the section: section 92(2)(m) for the charge and section 92(3) for the exemptions. The ICSI style is provision, analysis, conclusion.
Read each fact for a hidden exemption: marriage of the individual, inheritance, contemplation of death, a relative. Many questions are built around one of these.
Show the threshold comparison in a line, such as "Rs. 3,00,000 > Rs. 2,00,000, so taxable". Marks follow the logic, not only the final figure.
Check if the asset is listed property. Cars, furniture and household goods are traps.
The rule applies to any person who receives the amount, not only individuals. The exemption for marriage is available only to the individual, and the definition of relative has separate limbs for an individual and for a Hindu undivided family.

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

Who pays tax on a gift under the Income-tax Act, 2025?

The recipient pays. Under section 92(2)(m), the amount is added to the recipient's income under Income from other sources. The giver is not taxed on the gift.

Is a gift from a relative taxable?

No. Section 92(3)(a) says the clause does not apply to money or property received from a relative. There is no monetary limit on this exemption. Check that the giver falls within the list in section 92(5)(g).

What is the difference between a gift from a relative and from a non-relative?

A gift from a relative is fully outside section 92(2)(m). A gift from a non-relative is taxed in full if the total money received in the tax year exceeds Rs. 50,000, unless another exemption applies.

How is immovable property received for less than its stamp duty value taxed?

Find the excess of stamp duty value over consideration. If it is more than the higher of Rs. 50,000 or 10% of consideration, the excess is taxable. Otherwise nothing is taxed.

Are gifts received at marriage taxable?

Gifts received by an individual on the occasion of his or her own marriage are excluded under section 92(3)(b). Gifts on a marriage anniversary are not covered by this exemption.