Section 92(2)(m), Income-tax Act 2025: Tax on gifts of money and property over ₹50,000

When is a gift taxable, and when is it exempt?

Only gifts from non-relatives, worth more than ₹50,000 for the year, and outside a short list of occasions, are taxable. Everything else is tax-free. India abolished its separate gift tax in 1998, and since 2004 a gift is instead treated as the receiver's income and taxed at slab rates under the head income from other sources. There is no gift-tax rate as such: a taxable gift is simply added to your income and taxed like your salary or interest.

Three tests decide whether a receipt is taxed, and passing any one of them makes it exempt. Who gave it: a gift from a defined relative is always exempt. What the occasion was: a gift on your own marriage, under a will, or in contemplation of death is exempt. How much it is worth: a total at or below ₹50,000 for the year falls under the line. Miss all three shelters and the gift is taxable in full. The rest of this page works through each test with the numbers.

What changed when Section 56(2)(x) became Section 92(2)(m)?

The address changed, not the rule. The 1961 Act taxed gifts under Section 56(2)(x). The Income-tax Act 2025, in force from 1 April 2026 (tax year 2026-27), carries the same rule, with the same ₹50,000 line, the same relative list and the same exemptions, into Section 92(2)(m). Section 92 is the new home of income from other sources, the successor to the old Section 56.

The structure tracks the old clause closely. Money without consideration is Section 92(2)(m)(i); immovable property is 92(2)(m)(ii); other, movable property is 92(2)(m)(iii). The list of exempt gifts moves to Section 92(3), and the definitions of relative and property sit in Section 92(5). If you have read anything about the ₹50,000 gift rule under 56(2)(x), it now reads the same under 92(2)(m).

Section number, clause structure, thresholds and the relative list verified against the official Income-tax Act 2025 text published by the Income Tax Department.

Which gifts of money are taxable?

Money you receive without giving anything back is taxable once the year's total from non-relatives crosses ₹50,000, and then the whole amount is taxed, not just the part above ₹50,000. This is the single most misread rule in gift tax. If a friend gives you ₹60,000, you are taxed on all ₹60,000, never on ₹10,000.

The ₹50,000 is an aggregate across the whole tax year and across every non-relative giver added together, not a per-gift or per-person allowance. Five friends giving you ₹15,000 each add up to ₹75,000, which crosses the line, so the full ₹75,000 is taxed. Gifts from relatives are left out of this total, because they are exempt from the start.

Working out the taxable money is three steps:

• Add up every sum of money you received without consideration during the tax year, leaving out anything from a defined relative or on an exempt occasion.
• Compare the total with ₹50,000. At ₹50,000 or below, nothing is taxable. Above ₹50,000, the whole total is taxable.
• Add that amount to your income from other sources and pay tax at your normal slab rate. There is no separate gift-tax rate and no TDS on the gift itself.

Money here covers cash, cheque, bank transfer and electronic transfer alike; how it reaches you does not change the test.

How are gifts of property taxed?

Property gifts split into two kinds, and each has its own yardstick. Immovable property, meaning land and buildings, is measured by its stamp-duty value. Everything else the Act counts as property, that is shares and securities, jewellery, bullion, drawings, paintings, sculptures, other works of art, archaeological collections and virtual digital assets, is measured by its fair market value.

For each kind there are two cases. Receive the property for nothing and it is taxable if the value exceeds ₹50,000, on the whole value. Pay less than it is worth and the shortfall is taxable if it is large enough. For land and buildings the shortfall must beat a tolerance band, the higher of ₹50,000 or 10% of what you paid, before any of it is taxed, and then the entire shortfall is taxed. For movable property the plain ₹50,000 line applies to the shortfall.

Property for this rule is a closed list in Section 92(5): land and buildings, shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, bullion and virtual digital assets. A gift of anything outside the list, such as a motor car, is not taxed under this section however valuable.

Two details that decide the property number

Two points on land and buildings change the figure in practice. First, if the sale agreement and the registration fall on different dates, the stamp-duty value on the agreement date can be used, provided at least part of the price was paid through banking or online channels on or before the agreement date. In a rising market that locks in the earlier, lower value.

Second, if you think the stamp-duty value is too high, you can ask the Assessing Officer to refer it to a Valuation Officer. The Valuation Officer cannot push the value above the stamp-duty figure, so the referral can only help you, never cost you more. The same dispute route applies to the seller's capital-gains side under Section 78 (the old Section 50C).

Who counts as a relative?

A gift from a defined relative is exempt however large it is: a father can transfer ₹1 crore to his son with no tax on either side. The catch is that relative is a closed statutory list, narrower than the everyday sense of family, and it is read from the point of view of the person receiving the gift.

For an individual, a relative is:

• Your spouse.
• Your brothers and sisters, and your spouse's brothers and sisters.
• Brothers and sisters of either of your parents, that is your uncles and aunts.
• Any lineal ascendant or descendant of yours: parents, grandparents, children and grandchildren.
• Any lineal ascendant or descendant of your spouse: your parents-in-law and their parents.
• The spouse of any of the people above.
• For a Hindu Undivided Family, any member of the family counts as a relative.

Notice who is missing. Cousins are not relatives. Nor is a nephew or niece when they give to you, even though you are their relative when you give to them. A friend, however close, is never a relative. That asymmetry, exempt one way and taxable the other, is the trap the diagram above flags. The list is Section 92(5)(g), unchanged from the old Section 56 definition.

Which gifts are exempt no matter the amount?

Seven situations make a gift tax-free whatever it is worth, even a crore in cash. They sit in Section 92(3), and they override the ₹50,000 line completely.

• From a defined relative, per the list above.
• On the occasion of your own marriage. This covers only the person getting married, not their parents or siblings, and only the wedding, not an engagement or anniversary. Any giver qualifies, so a friend's lavish wedding gift is exempt.
• Under a will or by way of inheritance. What you inherit is never taxed as a gift, whatever its size.
• In contemplation of the death of the giver, a gift made by someone who believes they are dying (the law calls it donatio mortis causa).
• From a local authority, such as a municipality or panchayat.
• From a registered non-profit or charitable institution, and from a trust set up solely for the benefit of your relatives.
• Through a transaction the Act does not treat as a transfer, such as property received on the partition of a Hindu Undivided Family, or under an amalgamation or demerger.

Traps and edge cases in the gift rules

The rules are simple to state and easy to get wrong. These are the corners that most often produce an unexpected bill.

• The whole-amount cliff. Crossing ₹50,000 taxes the entire gift, not the excess. Aim to keep non-relative gifts at or below ₹50,000 for the year, or accept that the full sum is taxed.
• Cousins and the direction of a gift. A cousin is not a relative, so a cousin's gift over the line is taxable. And because the list is read from the receiver's side, a gift from you to your uncle is taxable in his hands even though his gift to you would be exempt.
• Buying property below its stamp-duty value. This is not a discount, it is a taxable gift of the shortfall once the shortfall beats the higher of ₹50,000 or 10% of the price. The seller may separately be taxed on the same stamp-duty value under the capital-gains rule now in Section 78 (old Section 50C).
• Large cash receipts. Accepting ₹2,00,000 or more in cash from one person, or for one occasion, is a separate offence (the old Section 269ST) carrying a penalty equal to the amount, and it bites even when the gift itself is exempt. Route large gifts through the bank.
• Gifts that are not property. A motor car, being outside the defined property list, is not taxed under this section however valuable, while a painting or a few grams of gold is.
• Employer gifts are a different rule. A gift from your employer is taxed as a salary perquisite under Section 17, not under the gift rule here, so this ₹50,000 line does not apply to it.

Does gifting money to your spouse or child save tax?

Usually not, because of clubbing. Giving cash or an asset to your spouse or minor child is exempt from gift tax, since they are relatives. But any income that asset then earns is taxed back in your hands under the clubbing rules, now Section 99 of the 2025 Act (the old Section 64). So gifting ₹20 lakh to your wife to open a fixed deposit does not move the interest off your own return.

The exemption still helps where clubbing does not reach. Income from an asset gifted to a major child, aged 18 or older, is not clubbed, so it is taxed in the child's hands at the child's own slab. The same is true of a gift to your parents. Income earned on reinvested income also escapes clubbing after the first cycle. Used deliberately, a gift to an adult family member who sits in a lower slab can shift future income legitimately; a gift to a spouse or a minor rarely does.

How do you report a gift, and what proof do you keep?

A taxable gift goes into your return under income from other sources and is taxed at your slab rate. There is no TDS on a gift and no separate gift-tax form: the amount simply joins your other income for the year. An exempt gift need not be reported as income, but you should still be able to prove why it was exempt.

The department sees more than you might expect. Your Annual Information Statement (AIS) pulls in large transactions: property registrations, sizeable bank credits, purchases of shares and jewellery. A ₹40 lakh flat bought for ₹30 lakh shows up through its registration, so an unexplained gap invites a notice. Keep the paper trail before you need it.

What to keep:

• A gift deed for anything substantial, and always for immovable property, stating that the gift is without consideration and out of natural love and affection.
• Proof of the relationship when you rely on the relative exemption, enough to show the giver sits on the statutory list.
• Proof of the occasion for a marriage gift, such as the wedding invitation and the dates.
• Evidence of the giver's means for a large gift, which protects you if the source of the money is later questioned.

How to receive a large gift without a tax bill

Plan around the three shelters and most gifts pass tax-free. The rule rewards routing through relatives, timing around a wedding, and staying inside the ₹50,000 line for everyone else.

Practical moves, with the numbers that matter:

• Route family money through a defined relative. A parent, sibling, spouse or child can give any amount tax-free, so a ₹50 lakh transfer from a father is clean while the same sum from a friend of the family is not.
• Use the wedding window. Gifts on the occasion of your marriage are exempt at any value and from anyone, so a friend's ₹5 lakh gift given at the wedding is tax-free while the identical ₹5 lakh a month later is fully taxed. Time large non-relative gifts to the event.
• Keep non-relative gifts at or below ₹50,000 for the year. One rupee over taxes the whole amount, so a ₹50,000 gift from a friend is free and a ₹51,000 gift is taxed on all ₹51,000.
• When buying property from family below market, keep the price within the band. Pay no less than the stamp-duty value minus the higher of ₹50,000 or 10% of the price, or expect the shortfall to be taxed as your income.
• Keep large gifts out of cash. Anything of ₹2,00,000 or more taken in cash risks a penalty equal to the amount, even on an exempt gift; a bank transfer avoids it and creates the proof you want anyway.

Worked examples

Section 92(2)(m) FAQs