NRI tax rules: When is a gift from India taxable?
Are gifts received by an NRI from a resident Indian taxable? Who is considered a 'relative' for gift tax purposes? How are different types of
Are gifts received by an NRI from a resident Indian taxable? Who is considered a 'relative' for gift tax purposes? How are different types of gifts taxed for NRIs? Type of Gift Received by an NRI Tax base If gifted by a specified relative If gifted by a non-relative Cash (Money / Bank Transfer) Amount received Fully exempt from tax Taxable if the aggregate value exceeds Rs 50,000 during the tax year Immovable Property Stamp Duty Value (SDV) Exempt from tax Taxable based on the property's stamp duty value if it exceeds Rs 50,000. Specified Movable Assets (shares, securities, jewellery, bullion, artworks, etc.) Fair Market Value (FMV) determined under the Income-tax Rules, 2026 Exempt from tax Taxable based on the fair market value if it exceeds Rs 50,000. Once the threshold is crossed, the entire FMV becomes taxable. What are the FEMA rules for NRIs if they receive gifts from resident Indians? What reporting and documents should NRIs maintain? Picture an NRI receiving a gift worth lakhs of rupees from someone back home in India. Will it be taxable? The answer isn't as straightforward as it may seem. Whether a gift is ta free or taxable depends on who gave it, what the gift is, and the relevant tax and FEMA rules. Missteps can be costly, especially if the money or asset has already changed hands.Here's what every NRI should know before accepting a gift from a resident Indian.An NRI can receive gifts from a resident Indian. However, the tax treatment depends primarily on the relationship between the donor and the recipient.“If the gift is received from a relative, it is completely ta free, irrespective of the amount or asset gifted,” says CA Abhishek Soni, CEO & Co-founder, Tax2win.And if the gift is received from a non-relative, it becomes taxable if the total value of gifts received during the financial year exceeds Rs 50,000, he adds.For example, a Rs 25 lakh gift received by an NRI from a resident parent would be exempt from tax.
In contrast, the same amount received from a friend or any other person who does not qualify as a relative would be taxable in India as ‘Income from Other Sources’.Under the Income-tax Act, the term "relative" has a specific legal meaning.For an individual, “relative” includes the spouse, siblings, spouse’s siblings, siblings of either parent, lineal ascendants and descendants of the individual or spouse, and the spouses of these persons.“In practical terms, parents, grandparents, children, grandchildren, spouse, siblings, many uncles and aunts, and spouses of these specified persons are covered. Friends, most cousins and distant relatives are not covered unless they independently fall within one of the specified statutory categories,” says Rahul Charkha, Partner, Economic Laws Practice.An individual’s NRI status does not alter this definition. The exemption depends on the legal relationship between the donor and the recipient under the Income-tax Act, 2025, not on whether either person is resident or non-resident, he further explains.The tax treatment varies depending on the asset being gifted.“For instance, an NRI receives Rs 3 lakh from his father as a gift. The amount is exempt. However, if the same amount is received from a friend, the entire Rs 3 lakh becomes taxable under Section 56(2)(x) and will be taxable based on the slab rate of the individual,” explains Neeraj Agarwala, Senior Partner, Nangia & Co LLP.The tax base is generally linked to the property’s stamp duty value.“For example, a flat gifted by a mother to an NRI son should ordinarily be exempt. However, if a non-relative gifts a property with a stamp duty value of Rs 1 crore, the NRI may be taxed on Rs 1 crore as income from other sources,” says Charkha.“For instance, a resident gifts listed shares worth Rs 5 lakh to an NRI friend.
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