Relative's Gift Tax-Free? Your ITR Must Show It

Gifts from close relatives like parents, spouse, or siblings are 100% tax-free in India. But from now on, you can't simply ignore them in your ITR — they must be disclosed under the exempt income section, not left out entirely.

Here's what happened: Gifts received from specified relatives (parents, spouse, siblings, children) are fully exempt from income tax under Section 56(2) of the Income Tax Act.. The Income Tax Department has clarified that exempt income — including tax-free gifts — must be reported in Schedule EI (Exempt Income) of the ITR, not silently omitted.. Failing to disclose gift amounts, even tax-free ones, can trigger scrutiny notices under Section 148 or 142(1) if deposits or fund flows appear in bank statements..

What you should do: Open your ITR form and locate 'Schedule EI' — report any gifts received from relatives here with the amount and relationship.. Maintain a simple paper trail: a gift deed or a short letter from the relative stating the gift amount, date, and relationship is enough documentation.. If you received a large cash or bank transfer gift this year, mention it under exempt income even if no tax is owed — this prevents mismatch notices from AIS or Form 26AS..

Gifts above ₹2 lakh in cash are illegal under the Income Tax Act regardless of who gives them — always accept large family gifts via bank transfer to stay compliant.