The basic rule
- From relatives: fully exempt, whatever the amount — spouse, parents, siblings, children, spouse’s relatives and other defined relatives.
- From anyone else: if the total value of gifts in the tax year exceeds ₹50,000, the whole amount is taxable as income (not just the excess).
- Gifts received on your marriage or by inheritance are exempt.
- The rule carried over into the Income-tax Act, 2025 (old section 56(2)(x)).
Gifts from your employer
- Small gifts in kind and vouchers below a prescribed annual limit are not taxed as a perquisite; above it, the value is taxed as salary. Cash gifts are always taxable salary.
- Check the current limit with your payroll team — it was revised under the Income-tax Rules, 2026.
Gifts from businesses
Gifts from clients or vendors received in the course of business or profession are business income, and the giver may need to deduct TDS on business perquisites above ₹20,000 — see the TDS rate chart.
Gifts across borders
- NRIs can receive gifts from resident relatives; residents can send gifts abroad under the Liberalised Remittance Scheme — with TCS of 20% on amounts above ₹10 lakh a year.
- Gifts from NRI relatives to residents are exempt like any gift from a relative.
Keep a simple record — giver, relationship, date, value — in case of questions later.
Frequently asked questions
Are Diwali gifts taxable in India?
Gifts from relatives are exempt. Gifts from others are taxable as income if their total value in the tax year exceeds ₹50,000 — and then the whole amount is taxed, not just the excess.
Are cash gifts from employers taxable?
Yes. Cash gifts from an employer are taxable as salary; gifts in kind and vouchers are exempt only up to the prescribed annual limit.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.