Under Section 56(2)(x) of the Income Tax Act, 1961, gifts received from non-relatives become taxable if the aggregate value exceeds ₹50,000 in a financial year. The taxable gift value must be reported under the head "Income from other sources" and is charged to tax at slab rates. This rule applies to gifts received in the form of cash, immovable property, shares, securities and certain other assets, unless they fall under one of the exemptions provided in the law. However, gifts from specified relatives and assets received under a will or as inheritance are exempt from this threshold. As per NDTV Profit, these taxable gifts often come as a surprise to taxpayers who assume that gifts are always tax-free.
As per the Income Tax Act 2025, Section 87A provides tax rebate to resident individuals whose income falls within specified limits. Under the new tax regime, the rebate applies if total income is up to ₹12 lakh, while under the old tax regime, the income limit is ₹5 lakh. The rebate is available only to resident individuals, with no age restriction - both senior citizens and non-senior citizens can avail of it. Importantly, non-residents are not eligible to claim this benefit. According to NDTV Profit, the rebate is 100% of your income tax liability or the maximum limit specified above, whichever is lower, making it potentially more generous than the new regime rebate.
As reported by Upstox, under the old tax regime, a rebate of up to ₹12,500 is available if total taxable income does not exceed ₹5 lakh, including long-term capital gains on listed equity and equity-oriented schemes up to ₹1.25 lakh. The rebate is available against tax liability of any nature except long-term capital gains on listed shares and units of equity-oriented schemes on which tax at 12.50% is payable. This effectively makes such long-term capital gains fully tax exempt. According to Mint, the rebate is 100% of your income tax liability or the maximum limit specified above, whichever is lower, making it potentially more generous than the new regime rebate.
According to Upstox reports, under the new tax regime, a rebate of up to ₹60,000 is available provided normal income on which tax is payable at slab rates does not exceed ₹12 lakh. This rebate is not available against tax liability in respect of incomes which are taxed at special rates like all long-term capital gains and short-term capital gains on listed shares and equity-oriented schemes irrespective of the level of these incomes. As per NDTV Profit, since gifts are taxed at slab rates, a resident individual whose total income (including such gifts) does not exceed ₹12 lakh under the new tax regime can use the Section 87A rebate to offset the tax liability completely, effectively reducing the tax payable on the gift to zero.
Not every gift is taxable, even if its value exceeds ₹50,000. The Income-tax Act provides exemptions for gifts received under certain circumstances, including gifts received on the occasion of an individual's marriage, through a will or by way of inheritance, and in contemplation of the death of the donor. Certain gifts remain exempt regardless of their value if they are received from specified persons or institutions, including specified relatives, local authorities, any trust, institutions, universities, educational institutions and hospitals covered under the Income-tax Act, and trusts created solely for the benefit of a relative. For Hindu Undivided Families (HUFs), every member of the HUF is treated as a relative for the purpose of the gift tax provisions, while in the case of individuals, the definition of a relative is limited to specified family members including a spouse, parents and children.
