According to tax experts, gifts received from specified relatives are not taxable under Section 56 of the Income-tax Act. As reported by ClearTax, gifts received on the occasion of marriage are also exempt from tax. The exemption extends to gifts from any person with an aggregate value not exceeding ₹50,000 in a financial year. Specified relatives include spouse, brothers and sisters of the individual, brothers and sisters of the spouse, and any lineal ascendants or descendants such as parents, grandparents, children and grandchildren.
The uncertainty has emerged due to changes in the latest ITR utilities for AY 2026-27. According to SBHS & Associates Partner Himank Singla, the revised ITR forms primarily cover exemptions available under Section 10 and do not provide a separate category for gifts received from relatives. In earlier years, taxpayers could disclose certain non-taxable receipts under the 'Other Exempt Income' section, but this option is no longer available in the current forms. As reported by Singla, there is currently no specific schedule requiring mandatory reporting of gifts received from relatives.
For AY 2026-27, there has been significant changes in ITR filing related to bank account reporting. Taxpayers are now required to disclose all active bank accounts as of March 31, 2026, including savings, current, cash credit, overdraft, NRO, and foreign accounts. Failure to comply with these reporting requirements may result in penalties of ₹10,000 for each missing bank account. The IT Department already receives information about interest income and high-value transactions through AIS, making correct disclosure essential. If you have a small business and want to file under presumptive taxation, you can opt for ITR-4, but ITR-4 filers must now disclose closing balance of every business bank account as of March 31, 2026.
Despite the tax exemption, maintaining proper records remains crucial for taxpayers. Taxpayers should retain adequate documentation including gift deed or gift declaration, identity proof of the donor, documents establishing relationship between donor and recipient, bank statements showing fund transfer, and evidence of donor's financial capacity. In case of scrutiny, tax authorities may examine donor identity, transaction genuineness and source of funds, making proper documentation essential for substantiation.
Tax experts emphasize that there is no specific schedule in the income tax return that mandates reporting of gifts received from relatives. As reported by SBHS & Associates, gifts from relatives are generally outside the tax net itself rather than exempt under specific provisions. However, taxpayers receiving substantial gifts should maintain adequate supporting documents for potential scrutiny by the Income-tax Department. Where high-value gifts significantly affect a taxpayer's financial position, appropriate disclosure may be made in balance-sheet-related schedules. For foreign bank accounts, Indian residents must disclose them in Schedule FA with accurate details to avoid Black Money Act penalties, as the government receives information through international agreements like FATCA and CRS.
