Under the New Income Tax Act, 2025, Section 92 lays down the taxation of gifts received by an individual, HUF, or any person. This new section replaces the earlier Section 56(2)(x) of Income Tax Act 1961 and provides a modern, structured framework for taxation of movable and immovable gifts.

In India, not all gifts are taxable. The taxability depends upon:

• The value of the gift
• The relationship between giver and receiver
• The type of property received
• The occasion (marriage, will, inheritance, etc.)

This article explains every clause of Section 92, including exemptions, valuation rules, property transfers, clubbing, documentation, and real-life examples.

What Is a Gift Under Section 92?

A gift refers to money, immovable property, or movable property received:

• Without consideration, or
• For inadequate consideration

If the value exceeds the prescribed threshold (generally ₹50,000), the gift becomes taxable as income unless it falls under an exemption in Section 92(3).

Taxability of Gifts — When Gifts Are Taxable? (Section 92(2)(m))

Gifts are taxable when:

Money Without Consideration

If total monetary gifts from non-relatives exceed ₹50,000 in a tax year:

• The entire amount becomes taxable.

📌 Example

You receive:

• ₹20,000 from a friend
• ₹40,000 from another friend

Total = ₹60,000 → exceeds ₹50,000 → ₹60,000 fully taxable

Immovable Property (Land/Building)

1. Without consideration

If stamp duty value (SDV) > ₹50,000 → taxable amount = SDV

2. With inadequate consideration

Taxable amount = SDV – consideration
But only if difference exceeds:

• ₹50,000 OR
• 10% of consideration
  (whichever is higher)

📌 Example

SDV = ₹50,00,000
Actual purchase price = ₹44,00,000
Difference = ₹6,00,000 (> both ₹50,000 & 10%)

→ ₹6,00,000 taxable as gift.

Movable Property (Jewellery, Shares, Bullion, Paintings, VDA, etc.)

1. Without consideration

If FMV > ₹50,000 → entire FMV taxable

2. Inadequate consideration

If FMV – consideration > ₹50,000 → difference taxable

📌 Example

You buy jewellery worth FMV ₹2,00,000 for ₹1,30,000.
Difference = ₹70,000 → taxable.

Gifts That Are 100% Tax-Free (Section 92(3))

The law provides a powerful list of exemptions.

✅ A. Gifts From Relatives (No Limit)

As per Section 92(5)(g), “relative” includes:

For an Individual:

• Spouse
• Brother or sister
• Brother/sister of spouse
• Brother/sister of either parent
• Lineal ascendants:
  • Father, Mother
  • Grandparents, Great-grandparents
  • Maternal ancestors
• Lineal descendants:
  • Children, Grandchildren, Great-grandchildren
• Lineal ascendants/descendants of spouse
• Spouses of all above (e.g., Bhabhi, Jiju, etc.)

For HUF:

• Any member of HUF is a relative.

👉 No monetary limit. Unlimited gifts are exempt.

✅ B. Gifts Received on the Occasion of Marriage of the Individual

This is one of the strongest exemptions.

• All gifts received on the wedding day, from anyone, are fully exempt.
• Even cash is exempt.
• No upper limit.
• Not applicable to anniversaries, children’s marriage, engagement.

📌 Example

You receive ₹10 lakh + gold + car on marriage → Entirely tax-free.

✅ C. Gifts under a WILL or Inheritance

No tax is levied on assets received through:

• Will (testamentary)
• Legal inheritance

Applies to money, property, jewellery, and other assets.

✅ D. Gifts in Contemplation of Death

If someone gives a gift anticipating their death, it is exempt.

✅ E. Gifts from Local Authorities

As defined in Schedule III.

✅ F. Gifts from Registered Non-Profit Organisations (Section 355(g))

Except for specific prohibited recipients.

✅ G. Gifts resulting from a transaction not regarded as transfer (Section 70)

This includes:

• Amalgamation
• Demerger
• Business reorganisations

Such transfers are exempt.

✅ H. Gift from an Individual to a Trust for Benefit of Relatives

100% exempt.

Special Rules for Immovable Property (Section 92(4))

If agreement date ≠ registration date:

Stamp duty value on agreement date shall be considered

Provided consideration (full or part) is paid through:

• Bank transfer
• Digital transfer
• Online banking modes

This prevents artificial differences due to market changes.

If SDV is disputed

AO may refer valuation to a Valuation Officer under Section 78 & 288.

List of Properties Covered Under “Gift” (Section 92(5)(f))

Property includes:

1. Land or Building
2. Shares and Securities
3. Jewellery
4. Archaeological collections
5. Drawings
6. Paintings
7. Sculptures
8. Any work of art
9. Bullion
10. Virtual Digital Asset (Crypto, NFTs, etc.)

Clubbing Provisions for Gifted Assets

Section 92 deals only with taxation of gift receipt.

But income generated from gifted assets is handled under separate rules.

Example:

You gift ₹5,00,000 to your wife.
She makes an FD generating ₹40,000 interest.

✔ Gift amount = Exempt
✔ Interest = Clubbed in your income (transfer without consideration to spouse)

Same applies for minor children (except exemptions under Section 64).

Gift Received From Employer

Employer gifts are NOT covered in Section 92 exemptions.

They are taxed under Salary (Perquisite).

• Long service award exemption = ₹5,000 only
• Remaining amount = taxable as salary

Capital Gains on Future Sale:

• Cost = FMV/taxable value at time of receipt
• Holding period begins from date of receipt

Documentation for Gifts (Practical Guidance)

While gift deed is not mandatory, the following serve as acceptable evidence:

• Bank transfer proof
• Marriage invitation card
• Gift list
• Photographs of occasion
• Reasonable explanation of source

For cash marriage gifts, customary practice is accepted.

Practical Real-Life Examples

Example 1: Gift from Father ₹10 lakh

• Father is relative → Exempt
• No tax

Example 2: Jewellery from Friend worth ₹1,00,000

• Friend = Non-relative
• FMV > ₹50,000 → Taxable
• Entire ₹1 lakh taxable

Example 3: Flat received from Uncle (Father’s brother)

• Uncle = Relative
  → 100% tax-free

Example 4: Gift of ₹5 lakh on Marriage from Colleague

• Any person → exempt if on marriage
  → Fully exempt

Example 5: Land purchased undervalue

SDV = ₹60 lakh
Price paid = ₹52 lakh
Difference = ₹8 lakh (> ₹50,000 & >10%)
→ ₹8 lakh taxable

Example 6: FD Gift to Wife

Gift: ₹7 lakh
FD Interest: ₹50,000
→ Interest clubbed in husband’s income

Example 7: Gift from Stepmother

Stepmother = “Spouse of father”
→ Covered under “relative” definition
→ Fully exempt

This law protects genuine family gifts while preventing misuse through commercial transactions disguised as gifts.

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