NRI gift tax in India: what is taxable and what is exempt
India has no separate gift tax — gifts are treated as income of the recipient under Section 56(2). Gifts received from 'relatives' (as defined) are fully exempt. Gifts from non-relatives above ₹50,000 in a year are taxable in the recipient's hands. NRIs can receive gifts in India and gift foreign currency abroad within FEMA rules.
Gifts to relatives are fully exempt — no gift tax
India does not have a gift tax. Gifts from relatives (spouse, siblings, parents, children and their spouses, etc.) are fully exempt from income tax in the recipient's hands. Gifts from non-relatives above ₹50,000 in a financial year are taxable as income. NRIs can gift foreign currency to resident relatives under FEMA's Liberalised Remittance Scheme.
Key points
- Relative gifts are tax-free — Gifts from a defined list of relatives are fully exempt regardless of amount — no upper limit.
- Non-relative gifts above ₹50,000 taxable — Gifts of money or property from non-relatives above ₹50,000 in a year are taxable as income in the recipient's hands.
- FEMA applies to cross-border gifts — NRIs gifting to resident relatives must follow FEMA rules. Resident Indians can gift up to USD 250,000 per year abroad under LRS.
Who is a 'relative' under Indian tax law
The definition of 'relative' under Section 56(2) of the Income Tax Act includes: spouse, siblings (and their spouses), parents (and their siblings), lineal ascendants and descendants (and their spouses), spouse's siblings (and their spouses).
Gifts within this defined list are fully exempt — a parent can gift any amount to a child, an NRI can receive any amount from a parent, without tax in either's hands.
Gifts between friends, colleagues, employer-employee (outside salary) and non-related individuals are taxable above ₹50,000.
NRI-specific gift scenarios
NRI gifts money to resident Indian family member: permitted under FEMA as a gift from an NRI to a relative — no limit specified, but practically the gifted funds go to the recipient's NRO account and the source should be documented.
Resident Indian gifts to NRI relative: permitted via the recipient's NRO account. Tax-free between relatives as above.
NRI gifts property in India to resident: property gift is a transfer — stamp duty applies. Capital gains rules may apply to the NRI donor if the property is transferred at below-market value.
Resident gifts to NRI under LRS: residents can remit up to USD 250,000 per year to NRI relatives under the Liberalised Remittance Scheme — this is a gift from India to abroad.
Frequently asked questions
Can an NRI gift money to a resident Indian friend?
Yes, but the recipient must include it as income if the total gifts from non-relatives exceed ₹50,000 in the financial year. The NRI has no Indian tax obligation on the gift itself.
Is there tax on gift of property to NRI?
For the donor (if resident): no income tax — it is a transfer, not a sale. Stamp duty is levied on property transfer even in gift. For the NRI recipient: the gifted property is not taxable at receipt (relative exemption applies if donor is a relative).
Can I gift money from an NRE account to my parents in India?
NRE funds are freely repatriable but gifting from NRE to a resident Indian bank account converts the funds to INR in the recipient's account. It is treated as a gift. Between relatives, it is tax-free.