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

Gifts from close relatives like parents, spouse, or siblings are fully tax-free in India. But from AY 2024-25, you can no longer skip reporting them in your ITR. You must declare them under the correct schedule or face scrutiny.

Here's what happened: The Income Tax department has clarified that gifts from specified relatives — parents, spouse, siblings, children — are exempt from tax but must now be disclosed in your ITR under the correct exempt income schedule.. Earlier, many taxpayers either skipped reporting relative gifts entirely or showed them under 'exempt income' in Schedule EI — both approaches are now considered incorrect or incomplete by the tax department.. The ITR forms now require taxpayers to report such gifts separately under Schedule 'Exempt Income (Others)' with the source and amount clearly mentioned, making non-disclosure a red flag for tax scrutiny..

What you should do: Check your ITR draft before filing: if you received any cash, property, or valuables from a relative in FY2024-25, log it explicitly under Schedule Exempt Income with the donor's name and relationship.. Collect written documentation for every large gift — a simple gift deed or letter from the relative stating the relationship and amount is enough to prove legitimacy if the IT department questions it.. Avoid reporting relative gifts under 'income from other sources' — that makes them taxable. Use the correct exempt income section; if unsure, consult a CA before the July 31 ITR deadline..

Gifts from relatives are exempt under Section 56(2)(x), but gifts from friends or non-relatives above ₹50,000 in a year ARE fully taxable — always check who gave it before deciding how to report it.