Under current income-tax rules, brothers and sisters are specifically covered within the definition of 'relative', making gifts between siblings tax-free regardless of value. As per latest reports, money or specified property received from a relative is not taxed as a gift, meaning a genuine gift between a brother and sister can generally be received without paying income tax, even if its value exceeds ₹50,000. This exemption applies to both cash transfers and other specified assets like gold and shares. For large transactions, transferring money through bank accounts leaves a clear trail and families may maintain simple gift declarations for documentation purposes.
Mutual fund units can be gifted to sisters through both demat accounts and Statement of Account (SoA) routes. Harshvardhan Roongta, CEO of Roongta Securities, explained that existing mutual fund investments can be transferred directly to sisters without making fresh investments. For SoA holdings, the transfer process can be initiated through registrar and transfer agents like CAMS and MF Central, with transferred units appearing in the sister's folio within 5-7 working days. Shares and ETFs held in demat accounts can also be transferred directly between accounts using Delivery Instruction Slips, with the sister not necessarily needing the same depository participant as her brother. However, a brother cannot use his own bank account to make fresh mutual fund investments in his sister's name - the payment must come from the sister herself or through a gift arrangement.
Gold remains a popular Rakhi gift, particularly in the form of jewellery or coins, with tax rules treating jewellery and bullion as specified property. However, the sibling relationship provides significant tax benefits. If a sister receives gold worth ₹1 lakh or ₹5 lakh from her brother as a genuine gift, the value of the gold is not treated as taxable income in her hands merely because she received it. The current law specifically includes jewellery and bullion within the list of property covered by gift provisions, while also excluding property received from a relative from taxation. It remains advisable to keep the original purchase bill, as it could prove useful many years later if the recipient decides to sell the gold. However, jewellery comes with additional costs including making charges and 3% GST on purchase, making it less cost-efficient for investment purposes.
Digital gold allows buying small quantities online while the underlying gold is typically stored in a vault, with platforms offering redemption options for physical gold or cash. However, SEBI cautioned investors in November 2025 about digital gold and e-gold products, stating these products are outside its regulatory framework and lack investor-protection mechanisms available for SEBI-regulated securities. This regulatory gap highlights the importance of choosing regulated investment options for gold exposure.
Experts emphasize that portfolio construction should not be based solely on the brother's risk appetite, with the sister's financial goals, investment horizon, and comfort with market fluctuations being crucial considerations. Prathiba Girish, founder of Finwise, noted that the portfolio can include equity, debt, gold or silver funds depending on the time horizon and beneficiary's comfort level, with the sister's understanding of investments being particularly important. For sisters uncomfortable with market-linked investments, experts recommend starting with gold and gradually building financial awareness over 1-2 years before introducing equity products. The experts stress that financial independence itself can become a meaningful Raksha Bandhan gift, with the value extending beyond immediate financial growth to long-term financial security and awareness creation.
